This is particularly true at the current time when the economic recovery has been sub-par and has been so dependent on bubbling asset values rather than rising employment and income from wages and salaries. In this environment we believe that the economy is likely to be even more sensitive than usual to rising rates. In this context we also think that too much has been made of the outwardly strong employment number that, upon examination, has a number of underlying weaknesses. This is the first strong report after four straight months in which expectations were not met even with the recent upward revisions. It is also only the third month of 35 in the present recovery to record more than 300,000 new jobs when, going by past recoveries, we should have averaged more than 300,000 additional jobs per month. In addition, of the 337,000 new jobs in October, 47,000 were temps, 41,000 were government and 71,000 construction, probably mostly hurricane-related. Without these, the jobs increase wouldn’t have even reached 200,000. Furthermore, in the household survey, 85 percent of the increase was in part-time jobs while the so-called augmented unemployment rate that adds back those not looking for work but would take it if offered, jumped from 8.4 percent to 8.8 percent, the highest in 12 months.
In sum, we still think this is an unsustainable economic recovery, and the Fed’s continued tightening along with the winding down of fiscal stimulation and the far lower level of mortgage refinancing are likely to create strong headwinds against growth.
Tuesday, November 30, 2004
LEI and GDP
"BEAUTY in the EYE of the BEHOLDER"
• Index of Leading Economic Indicators (LEI or ILEI): The Conference Board provides this index every quarter. It consists of 11 economic reports, such as initial unemployment claims, stock-market activity, building permits, new orders for consumer goods, plant and equipment orders and sensitive material prices.
Since the LEI consists of so many varied economic reports, it is generally considered to be a helpful gauge of future economic activity. In fact, three consecutive increases in the LEI suggest the economy may be on the threshold of a sustained period of expansion.
**Now, all I ask of you is to take the GDP report in context to the description for the LEI, and know that we have had FIVE consecutive DECLINES in it and 6 of the last 7.
• Index of Leading Economic Indicators (LEI or ILEI): The Conference Board provides this index every quarter. It consists of 11 economic reports, such as initial unemployment claims, stock-market activity, building permits, new orders for consumer goods, plant and equipment orders and sensitive material prices.
Since the LEI consists of so many varied economic reports, it is generally considered to be a helpful gauge of future economic activity. In fact, three consecutive increases in the LEI suggest the economy may be on the threshold of a sustained period of expansion.
**Now, all I ask of you is to take the GDP report in context to the description for the LEI, and know that we have had FIVE consecutive DECLINES in it and 6 of the last 7.
Weaker $$$$ only brings PAIN
http://www.briefing.com/Silver/Calendars/EconomicReleases/gdp.htm
Look at chart showing net exports....since dollar made its highs....the exports have crumbled along with value of dollar!!!!This is because CHinese dollar policy and our low interest rates have helped to build China as world engine as instead of goosing domestic spending and consumption in our country for OUR goods, we have stimulated others at OUR expense.Crouching tiger no more.
With YUAN dollar peg.....this will not change.Going forward we depend even more of the kindness of strangers.And WE are the worlds economic engine? WIth an already HISTORIC above 1929 total debt to GDP %?
As I continue and will exhort til my last breath....NOTHING in place in 1980 at beginning of GREAT longest bull is in place now....it is turned upside down on its head!The 3.9 GDP is PURE fiction as the US is ONLY country to report in HEDONIC INFLATED make believe numbers.
Earnings growth decelerating....stimulus over.....deficits soaring, debt exploding....just to pay INTEREST on DEBT mind numbing.....pay the piper day of reckoning Greenspan style never to come......those of us NOT alseep know the damage done and the price to be paid.....sooner or later.
With some measures of stock market bullishness ABOVE what was found in 2000??!!! Make you emind up as to whether there is still VALUE to be found, and that years ending in FIVE being positive with NO foundation for that will AGAIN be true.
D
http://www.briefing.com/Silver/Calendars/EconomicReleases/gdp.htm
Look at chart showing net exports....since dollar made its highs....the exports have crumbled along with value of dollar!!!!This is because CHinese dollar policy and our low interest rates have helped to build China as world engine as instead of goosing domestic spending and consumption in our country for OUR goods, we have stimulated others at OUR expense.Crouching tiger no more.
With YUAN dollar peg.....this will not change.Going forward we depend even more of the kindness of strangers.And WE are the worlds economic engine? WIth an already HISTORIC above 1929 total debt to GDP %?
As I continue and will exhort til my last breath....NOTHING in place in 1980 at beginning of GREAT longest bull is in place now....it is turned upside down on its head!The 3.9 GDP is PURE fiction as the US is ONLY country to report in HEDONIC INFLATED make believe numbers.
Earnings growth decelerating....stimulus over.....deficits soaring, debt exploding....just to pay INTEREST on DEBT mind numbing.....pay the piper day of reckoning Greenspan style never to come......those of us NOT alseep know the damage done and the price to be paid.....sooner or later.
With some measures of stock market bullishness ABOVE what was found in 2000??!!! Make you emind up as to whether there is still VALUE to be found, and that years ending in FIVE being positive with NO foundation for that will AGAIN be true.
D
Thursday, November 25, 2004
I Have been to the mountain top.....
.....and I can see into the valley
....http://tinyurl.com/5fr9u This ratio as a tool for timing is not so good as you don't know how low or high it will go until it REVERSES.WHat do have is 10 years of data (limit of my chart) to look BACK on to make "observations".WHat I observe is that during the BEST of the GREAT BULL MKT this ratio stayed at or BELOW the median range, hardly going above 60 (McHUgh posts that 68 is "crash levels")....until late 1999 into 2000 a reading of 80 then 91 was seen...it was over.After several spikes of fear and doom....the ratio plunged to low 20's, once after 911 which helped spur a long multi month rally, then twice more in late 2002 and early 2003 (bottom of last bear market to date).The reading now stands at above 92 the highest reading ever recorded. This ratio and the VIX tell the true story of how much fear and greed is in market, IMHO WHen anything gets to very extreme readings IMHO it should be taken seriously, especially when its relationship to market action is so well documented.The top in 2000 was painful to predict for Bears, so is this one, to millions who stayed long unaware of any portending problems....even more painful.We have TRansports at 6 yr highs, only 2 reading ever higher!We have Dow STILL below its 2004 high! We have NAZ 60% below highs of 2000, SPX 20% below.Now you might say look how far they can rally. But a market diverging is not healthy.....and when you consider some readings like 10 sentiment readings are at historical highs, and so is the SPX/VIX ratio.....but we remain well below their index highs.....should bring alarm.Lots of things could happen to keep it going....low rates.....seasonality, year ending in FIVE (no rational reason), potential influx of year end contributions, wall street managers HUMPING it higher for better bonuses.....funds piling into the good performers to make them look better....etc.YET, I get the profound feeling ALL IS NOT RIGHT. MY company acct., has a diverse list of clients, most of which are struggling or breaking even.I see 6 of LAST 7 LEI readings DECLINED!? I see TOPPED out COnsumer Sentiment readings.I see MORE capacity and LOWER capacity utilizations (in chips esp.)I see NO gains in Help Wanted Index.I see NO wage growth and NO savings.I see NO end to deficits and trade imbalances.I see pressure on FED to continue RAISING interest rates, this will hit hard those on revolving credit....a rising rate environment not usually condusive to rising stock prices.UNLIKE before, when we slow down, housing prices may collapse....and housing is where most have stashed their wealth....and is most ILLiquid.Inflation, weaker dollar, rising gold to 16 yr highs......soaring deficits...etc....have NOT caused a significant rise in longer term rates??!!This can ONLY be the case of CHINA and JAPAN stepping in??Again...most trades...derivitives have to unwound at some time.Historical highs in gold bulls and euro and lows for dollar bulls.....the stuff of trend reversals...IMHO, for near term only a shocking rise in rates....fall in dollar....or Terrorist action will derail this cyclical bull.What is obvious is the stats I listed on bullishness....what is not is how high those readings will go until they reverse.....and what will JOG investors out of their complacency....irregardless of the "side bets"....money laying long hasn't felt this good since....I don;t know...1999?If a K-WAVE really exists other than in the minds of its creator and those who interpret it.....a LASTING TOP in credit expansion is quickly nearing an end....those who follow and believe in the K know what MUST come next.....illiminate debt and speculation...Too much triptifan....making me grouchy! LOL
....http://tinyurl.com/5fr9u This ratio as a tool for timing is not so good as you don't know how low or high it will go until it REVERSES.WHat do have is 10 years of data (limit of my chart) to look BACK on to make "observations".WHat I observe is that during the BEST of the GREAT BULL MKT this ratio stayed at or BELOW the median range, hardly going above 60 (McHUgh posts that 68 is "crash levels")....until late 1999 into 2000 a reading of 80 then 91 was seen...it was over.After several spikes of fear and doom....the ratio plunged to low 20's, once after 911 which helped spur a long multi month rally, then twice more in late 2002 and early 2003 (bottom of last bear market to date).The reading now stands at above 92 the highest reading ever recorded. This ratio and the VIX tell the true story of how much fear and greed is in market, IMHO WHen anything gets to very extreme readings IMHO it should be taken seriously, especially when its relationship to market action is so well documented.The top in 2000 was painful to predict for Bears, so is this one, to millions who stayed long unaware of any portending problems....even more painful.We have TRansports at 6 yr highs, only 2 reading ever higher!We have Dow STILL below its 2004 high! We have NAZ 60% below highs of 2000, SPX 20% below.Now you might say look how far they can rally. But a market diverging is not healthy.....and when you consider some readings like 10 sentiment readings are at historical highs, and so is the SPX/VIX ratio.....but we remain well below their index highs.....should bring alarm.Lots of things could happen to keep it going....low rates.....seasonality, year ending in FIVE (no rational reason), potential influx of year end contributions, wall street managers HUMPING it higher for better bonuses.....funds piling into the good performers to make them look better....etc.YET, I get the profound feeling ALL IS NOT RIGHT. MY company acct., has a diverse list of clients, most of which are struggling or breaking even.I see 6 of LAST 7 LEI readings DECLINED!? I see TOPPED out COnsumer Sentiment readings.I see MORE capacity and LOWER capacity utilizations (in chips esp.)I see NO gains in Help Wanted Index.I see NO wage growth and NO savings.I see NO end to deficits and trade imbalances.I see pressure on FED to continue RAISING interest rates, this will hit hard those on revolving credit....a rising rate environment not usually condusive to rising stock prices.UNLIKE before, when we slow down, housing prices may collapse....and housing is where most have stashed their wealth....and is most ILLiquid.Inflation, weaker dollar, rising gold to 16 yr highs......soaring deficits...etc....have NOT caused a significant rise in longer term rates??!!This can ONLY be the case of CHINA and JAPAN stepping in??Again...most trades...derivitives have to unwound at some time.Historical highs in gold bulls and euro and lows for dollar bulls.....the stuff of trend reversals...IMHO, for near term only a shocking rise in rates....fall in dollar....or Terrorist action will derail this cyclical bull.What is obvious is the stats I listed on bullishness....what is not is how high those readings will go until they reverse.....and what will JOG investors out of their complacency....irregardless of the "side bets"....money laying long hasn't felt this good since....I don;t know...1999?If a K-WAVE really exists other than in the minds of its creator and those who interpret it.....a LASTING TOP in credit expansion is quickly nearing an end....those who follow and believe in the K know what MUST come next.....illiminate debt and speculation...Too much triptifan....making me grouchy! LOL
Thursday, November 18, 2004
Wednesday, November 17, 2004
Common Sense from John Hussman and my 2 C
http://www.hussman.net/wmc/wmc041115.htm
WHat is fueling the current bull market rise IMHO is exessive speculation and the relaxation of reality. A RISE which goes unabated (3% correction) can then also correct unabated when over.
WE have reached no new era of investment, old rules still apply. And IF you buy an overvalued stock, your ONLY hope is that someone else is willing to pay you MORE for it. Like ANY PYRAMID scheme, it will end.
Sometime in 2005 I think reality will return to the stock market and so will the bear market. With the Governments inability to do much about it, having spent ALL their ammo digging us out of the last bubble that burst, the end result could be much more painful.
WHen a country and its citizens lack savings, then the investment goes to other nations, and so does our wealth and manufacturing base, any just see this as a sign of the times.
BIG BOX stores rule the landscape, and bring in deflated goods from China (WMT), only offering low paying jobs in its wake.
I see benefits to lower consumer prices, but I also see our inventiveness going out the window. China is trying to slow down its economy, but investment keeps pouring in. SO I don't see how our manufacturing capacity can recover sitting at decades low of utilization.
Yesterday we saw a 14 year high jump in the PPI as INFLATION is a real threat. Raising interest rates is one way to deal with that should the dollar weaken appreciably.
AS of right now, the gambit has been to KEEP rates SO LOW that savers be damned! And that money has flowed into stocks. There is NO equilibrium. And we depend on foreign governments tobuy almost $2 Billion a DAY! of our DEBT to subsidize our thrist for consumption. WE are SELLING out country off in pieces. There is NO PRIDE IN BUY AMERICA.....as in buy what?
MILLIONS upon MILLIONS of young Chinese and Indian, Pakastani children well educated and willing towork for PEANUTS are entering the workforce, and will be competing with yours and mine children for a job.......WHO will win?
MOST BIG corporations are setting up shop and hiring in those countries.
MOST BIG corporations are giving back dividends or buying back stock with excess cash.......INSTEAD of investing here!
Dividend yields on SPX stocks are STILL only 1.7% EVEN with the new tax status lowering taxes on them to shareholders. HISTORICAL NORM is 4% !!!!!!!!!! AT MARKET TOPS AVG IS 3%!!!! AT BOTTOMS NEAR 6%!!!!!!
This comparison data goes IGNORED by Wallstreet and now Mary MEEKER and company (goosn who screwed investors during bubble with idiotic advice and hype) have re-emerged from the dust of the bursted bubble.
This rebirth of the BULL does not come from a SOLID GROUND (typical bear mkt bottoms of 6% yields and SPX PE of single digits...at OCT bottom it was SPX PE of 30!!!).
"Castles made from sand drift into the sea.........eventually" Even under LSD...Jimi knew!
Tread lightly my friends....and keep those stops tight, IMHO
Duratek
WHat is fueling the current bull market rise IMHO is exessive speculation and the relaxation of reality. A RISE which goes unabated (3% correction) can then also correct unabated when over.
WE have reached no new era of investment, old rules still apply. And IF you buy an overvalued stock, your ONLY hope is that someone else is willing to pay you MORE for it. Like ANY PYRAMID scheme, it will end.
Sometime in 2005 I think reality will return to the stock market and so will the bear market. With the Governments inability to do much about it, having spent ALL their ammo digging us out of the last bubble that burst, the end result could be much more painful.
WHen a country and its citizens lack savings, then the investment goes to other nations, and so does our wealth and manufacturing base, any just see this as a sign of the times.
BIG BOX stores rule the landscape, and bring in deflated goods from China (WMT), only offering low paying jobs in its wake.
I see benefits to lower consumer prices, but I also see our inventiveness going out the window. China is trying to slow down its economy, but investment keeps pouring in. SO I don't see how our manufacturing capacity can recover sitting at decades low of utilization.
Yesterday we saw a 14 year high jump in the PPI as INFLATION is a real threat. Raising interest rates is one way to deal with that should the dollar weaken appreciably.
AS of right now, the gambit has been to KEEP rates SO LOW that savers be damned! And that money has flowed into stocks. There is NO equilibrium. And we depend on foreign governments tobuy almost $2 Billion a DAY! of our DEBT to subsidize our thrist for consumption. WE are SELLING out country off in pieces. There is NO PRIDE IN BUY AMERICA.....as in buy what?
MILLIONS upon MILLIONS of young Chinese and Indian, Pakastani children well educated and willing towork for PEANUTS are entering the workforce, and will be competing with yours and mine children for a job.......WHO will win?
MOST BIG corporations are setting up shop and hiring in those countries.
MOST BIG corporations are giving back dividends or buying back stock with excess cash.......INSTEAD of investing here!
Dividend yields on SPX stocks are STILL only 1.7% EVEN with the new tax status lowering taxes on them to shareholders. HISTORICAL NORM is 4% !!!!!!!!!! AT MARKET TOPS AVG IS 3%!!!! AT BOTTOMS NEAR 6%!!!!!!
This comparison data goes IGNORED by Wallstreet and now Mary MEEKER and company (goosn who screwed investors during bubble with idiotic advice and hype) have re-emerged from the dust of the bursted bubble.
This rebirth of the BULL does not come from a SOLID GROUND (typical bear mkt bottoms of 6% yields and SPX PE of single digits...at OCT bottom it was SPX PE of 30!!!).
"Castles made from sand drift into the sea.........eventually" Even under LSD...Jimi knew!
Tread lightly my friends....and keep those stops tight, IMHO
Duratek
Tuesday, November 16, 2004
Saturday, November 13, 2004
Frontline THoughts
http://www.frontlinethoughts.com/printarticle.asp?id=mwo111204 Mauldin always a worthwhile read.
When the BULLS run this, it is hard to see forrest for the trees. Could be headed MUCH higher, but a breather would be healthy, much more vertical climbing and it could be a nasty correction rather than just a bullish correction...which would be healthy.
NO market goes in straight line or it could come back SAME path. We don't want that, we like order.
Action has been SO strong I am inclined to think higher is way we do go, but a retrace of at least .382 Fib ratio is needed, IMHO
Best to all. Always good to keep open mind to any potential outcome.
Must keep some CASH in portfolio so you can buy into the lower lows like in 2002 when market bottomed.....if fully invested and your LTBH, you go down and up with ship.
A GOOD financial planner able to rebalance your portfolio would be great start.
Had you exited any tech in 2000, and bought gold/gold shares, BONDS......you have weathered the storm andmade a great deal of money. FED tipped hand with speed of rate cuts.
But it took 13 rate cuts to 45 yr lows to KICK START economy.....how often in history do you think that has ever happened.
WE have had only 2 months since Recession officially ended, where the jobs data added more than 300K jobs. Making this believe it or not the weakest recovery in history.
Enjoy the Bush re-election rally while it lasts....but keep both eyes open
D
When the BULLS run this, it is hard to see forrest for the trees. Could be headed MUCH higher, but a breather would be healthy, much more vertical climbing and it could be a nasty correction rather than just a bullish correction...which would be healthy.
NO market goes in straight line or it could come back SAME path. We don't want that, we like order.
Action has been SO strong I am inclined to think higher is way we do go, but a retrace of at least .382 Fib ratio is needed, IMHO
Best to all. Always good to keep open mind to any potential outcome.
Must keep some CASH in portfolio so you can buy into the lower lows like in 2002 when market bottomed.....if fully invested and your LTBH, you go down and up with ship.
A GOOD financial planner able to rebalance your portfolio would be great start.
Had you exited any tech in 2000, and bought gold/gold shares, BONDS......you have weathered the storm andmade a great deal of money. FED tipped hand with speed of rate cuts.
But it took 13 rate cuts to 45 yr lows to KICK START economy.....how often in history do you think that has ever happened.
WE have had only 2 months since Recession officially ended, where the jobs data added more than 300K jobs. Making this believe it or not the weakest recovery in history.
Enjoy the Bush re-election rally while it lasts....but keep both eyes open
D
Wednesday, November 10, 2004
DELTA AIRLINES NEWS
Delta to cut 6,000-6,900 jobs, issue 75 mln sharesWed Nov 10, 2004 08:27 AM ET CHICAGO, Nov 10 (Reuters) - Delta Air Lines (DAL.N: Quote, Profile, Research) on Wednesday said it plans to eliminate between 6,000 and 6,900 jobs during the next 18 months, implement a 10 percent across-the-board pay reduction and reduce employee benefits.
Delta said it would issue as much as 75 million shares of common stock as part of its restructuring plan.
A committee of its board of directors said any delay in shareholder approval could "seriously jeopardize" its financial viability.
***Stock dilution, job cuts and pay cuts....whoopie!
D
Delta said it would issue as much as 75 million shares of common stock as part of its restructuring plan.
A committee of its board of directors said any delay in shareholder approval could "seriously jeopardize" its financial viability.
***Stock dilution, job cuts and pay cuts....whoopie!
D
PFE News and Trade Deficit News
http://www.thestreet.com/_yahoo/stocks/biotech/10193568.html?cm_ven=YAHOO&cm_cat=FREE&cm_ite=NA
http://www.forbes.com/markets/2004/11/10/cx_ab_1110video1.html?partner=yahoo&referrer=
Yes Trade deficit may have lessened due to rise in exports led by dollar weakness (making OUR goods cheaper), HOWEVER (can't I just take good news? LOL) this is not much improvement in deficit which is still near RECORD numbers.
Any further sharp declines in dollar could lead to a SPIKE in interest rates.
FED meets today and is expected to increase interest rates by predicted 25 basis points, the rate given to Banks. Carry trade play basically wiped out here. Not sure which side of coin HEDGE FUNDS are on as they were record long rates early summer and could have been hurt by any sharp rise in long term rates.
During this economic rebound, the FED telegraphed they would HOLD DOWN rates, and the carry trade PILED ON long bond positions, which helped reduce long term rates.
At some point you would assume they would unwind those positions.
Duratek
http://www.forbes.com/markets/2004/11/10/cx_ab_1110video1.html?partner=yahoo&referrer=
Yes Trade deficit may have lessened due to rise in exports led by dollar weakness (making OUR goods cheaper), HOWEVER (can't I just take good news? LOL) this is not much improvement in deficit which is still near RECORD numbers.
Any further sharp declines in dollar could lead to a SPIKE in interest rates.
FED meets today and is expected to increase interest rates by predicted 25 basis points, the rate given to Banks. Carry trade play basically wiped out here. Not sure which side of coin HEDGE FUNDS are on as they were record long rates early summer and could have been hurt by any sharp rise in long term rates.
During this economic rebound, the FED telegraphed they would HOLD DOWN rates, and the carry trade PILED ON long bond positions, which helped reduce long term rates.
At some point you would assume they would unwind those positions.
Duratek
PIMCO Strategic Global Fund
http://stockcharts.com/def/servlet/SC.web?c=RCS,uu[w,a]wallyiay[pc20!c5][vc60][iut!Ub14!La12,26,9]&pref=G
MACD just gave a sell signal on the weekly. Is this fund telling us something about the global economy?
D
MACD just gave a sell signal on the weekly. Is this fund telling us something about the global economy?
D
FED Warns on Government Spending
Greenspan, Fed Governors Warn on Government Spending (Update1)
Nov. 10 (Bloomberg) -- Federal Reserve Chairman Alan Greenspan says the growing U.S. budget deficit could destabilize the economy. Fed Governor Susan Bies says Congress spends like it's dipping into a ``a cookie jar.'' St. Louis Fed President William Poole says Social Security is in jeopardy.
In the last two months, Greenspan and at least seven other Fed officials have warned lawmakers about tax and spending policies that have led to record budget and current account gaps.
As Greenspan, 78, in January begins his last year atop the central bank, the comments suggest Fed members are concerned his successor will have less room to guide an economic expansion should they have to raise interest rates to counter a plunging dollar or surge in spending. Fed policy makers are likely to raise the benchmark rate by a quarter point to 2 percent when they meet today in Washington, a Bloomberg News survey shows.
The policy making Open Market Committee began meeting at 9 a.m. Washington time, a Fed spokesman said. The committee's decision on interest rates is expected around 2:15 p.m.
``If you get to a point of fairly significant long-term structural budget deficits, it begins to impact on the level of long-term interest rates,'' Greenspan told the House Budget Committee on Sept. 8. That means the government must pay higher rates to borrow money, leading to even higher deficits, he said.
``If you get into that sort of debt maelstrom, it is a very difficult issue to get out of,'' he said.
Record Deficits
The Open Market Committee has already raised rates three times since June to restore its benchmark rate to a level that neither slows growth nor sparks inflation. All 89 economists surveyed by Bloomberg predicted Greenspan and the FOMC would increase the overnight rate again at today's meeting because a more-than-expected gain of 337,000 jobs in October signals the economy is starting to use up spare capacity.
Budget surpluses from 1998 to 2001 helped Greenspan orchestrate the longest economic expansion in U.S. history. When the boom ended in 2001, low inflation allowed the Fed to cut the benchmark rate to 1 percent, the lowest since 1958, limiting the recession to just eight months.
Then the surpluses evaporated. President George W. Bush, who will choose the next Fed chairman, won passage of $1.85 trillion in tax cuts and raised spending for wars in Iraq and Afghanistan. Defense spending rose 12.4 percent in fiscal 2004 to $437 billion, the Congressional Budget Office said.
The budget deficit widened to a record $413 billion in the fiscal year ended Sept. 30, with government spending rising 6.2 percent from the previous year. The deficit amounted to about 3.6 percent of the country's $11.8 trillion gross domestic product, the highest percentage since 1993.
Policy `Out of Whack'
Social Security, the main government-funded retirement program, will spend more money than it takes in starting in 2018, according to a report by the program's trustees. Unless taxes are increased or benefits cut, trust-fund assets for retirees, now at $1.4 trillion, will fall to zero by 2042. A report by trustees of Medicare, a federal health-insurance program, shows their hospital insurance fund spending will exceed income by 2012.
``There are a number of things that are just extraordinary, beginning with the fiscal imbalance,'' said Representative Jim Leach, an Iowa Republican and former head of the House Financial Services Committee, which oversees the Fed. ``The Fed has less credible discretion the more out of whack fiscal policy gets.''
Possible Successors
Bush, 58, who won re-election on Nov. 2, hasn't mentioned a likely successor to Greenspan, whose nonrenewable term as governor ends Jan. 31, 2006, after a tenure spanning four presidents.
Alan Blinder, a Fed vice chairman from June 1994 to January 1996, said possible successors include Harvard University economist Martin Feldstein, 64, a Bush adviser on Social Security, and John Taylor, 57, Treasury undersecretary for international affairs.
Blinder, a 59-year-old Princeton University economist who was an adviser to Democratic nominee John Kerry, also named Fed Governor Ben Bernanke, 50, and former Fed Governor Lawrence Lindsey, 50, as potential candidates, at a Sept. 28 meeting of the Council on Foreign Relations in Washington.
Greenspan's successor must steer the economy through the effects of deficits, high oil prices and global terrorism, Leach, 62, said.
``These are extraordinary times,'' he said. ``Virtually all the risks in the world economy are on the downside.''
Crude oil for December delivery reached a record $55.67 a barrel in New York on Oct. 25. While prices have since slipped to $47.37 a barrel yesterday, oil is still 53.4 percent higher than a year ago.
$88.5 Billion Tax
San Francisco Fed Bank President Janet Yellen, 58, said the surge would result in a temporary boost in broad inflation and, as long as prices stay high, a tax on U.S. consumers. Greenspan said that tax amounted to about $88.5 billion this year, equal to 0.75 percentage points of GDP.
Former Dallas Fed President Robert McTeer flagged the record $166.2 billion deficit in the U.S.'s current account, the broadest measure of trade, as a threat to stability.
The current-account shortfall was equal to 5.7 percent of the economy in the second quarter, up from 5.1 percent in the first three months. The U.S. needs to attract about $1.8 billion a day from overseas to plug the gap. If other nations sour on U.S. securities, the value of the dollar may plunge.
``The current account deficit is going to cause problems,'' said McTeer, 62, who resigned Nov. 4 from the Fed to run Texas A&M University in College Station, Texas. ``Flows will turn against us, and there will be a crisis that will result in rapidly rising interest rates and a rapidly depreciating dollar that will be very disruptive,'' he said on Oct. 7 at a New York event sponsored by Market News International.
Dollar Drop
Bush's pledge to make his tax cuts permanent also has traders predicting the dollar will continue to fall. The currency may fall to its lowest level ever against the euro for a second consecutive week after Bush signaled he would expand policies that fueled the deficits and the dollar's decline of about 20 percent against a basket of currencies since he took office in 2001, according to a Bloomberg News survey. Bush will also seek more funding for the war in Iraq.
Sixty percent of the traders, strategists and investors questioned on Nov. 5 from Tokyo to New York advised selling the dollar against the euro.
``A second term for Bush doesn't bode well for the dollar,'' said Samarjit Shankar, director of global foreign-exchange strategy at Mellon Financial Corp. in Boston, which manages $625 billion. ``There's no way of convincing the market additional spending on the war can be paid for if you have a lower tax base. It's a fundamental mismatch between spending and revenue.''
Can't Go On
Greenspan urged Congress on Sept. 8 to rein in spending and return to the ``pay-as-you-go'' system that was in place during President Bill Clinton's administration, whereby all new expenditures or tax cuts needed to be offset by reductions in other programs or higher fee income from government services.
``We cannot continue to just go on without saying, `We can have this, but not this,' and pay-go embodies that mechanism,'' the chairman said.
The costs of Social Security and Medicare are likely to balloon as the 84 million members of the baby-boom generation -- those born between 1946 and 1964 -- begin to retire in 2010, pushing federal government obligations higher, even as the taxpaying workforce shrinks.
``If we have promised more than our economy has the ability to deliver to retirees without unduly diminishing real income gains of workers, as I fear we may have, we must recalibrate our public programs so that pending retirees have time to adjust through other channels,'' Greenspan said in an Aug. 27 speech in Jackson Hole, Wyoming. ``If we delay, the adjustments could be abrupt and painful.'' Greenspan was chairman of the Commission on Social Security Reform from 1981 to 1983.
`Cookie Jar'
Since then, Poole, 67, of the St. Louis Fed, has made two speeches advocating an increase in the retirement age as a way to reduce the cost of Social Security.
Fed Governor Bies blamed lawmakers for sometimes spending taxpayers' money for political gain during the past four years.
``The part of it that has gotten me so upset is that in this whole election debate, nobody's been talking about the spending side,'' Bies, 57, said after a speech to investors in Rosslyn, Virginia, on Oct. 23, 10 days before the presidential election.
``If you take out Homeland Security and Defense, it has been a cookie jar over the last four years,'' she said. ``Everything has gotten loaded in. Money has gone into these appropriation bills that are funding everything under the sun.''
Another challenge facing Greenspan in his final year is the behavior of the labor market. The economy has created just 814,000 net payroll jobs since the end of the last recession in 2001, even with average annualized GDP growth of 3.3 percent. That's the slowest pace of any expansion of the last 60 years.
Presidential Pressure
Presidents and Congress have sought to influence Fed chairmen throughout the central bank's 90-year history to try to promote their own economic policies. Low interest rates can help finance budget deficits, stimulate economic growth and help offset the negative impact of tax increases.
Harry Truman, the 33rd president, invited Federal Reserve policy makers to the White House in January 1951 to try to persuade them to continue to keep yields on Treasury securities low to help finance the Korean War.
Former President Richard Nixon said he respected Arthur Burns's independence when he appointed Burns to the Fed chairmanship. Then Nixon said: ``I hope that independently he will conclude that my views are the ones he should follow,'' Fed historian Allan Meltzer, a political economy professor at Carnegie Mellon University in Pittsburgh, wrote in a recent paper.
Too Accommodating
Lyle Gramley, who worked as Burns's speechwriter before becoming a Fed governor, said: ``He'd talk to the president, and the president was concerned about where the economy was going. There was evidence of a good bit of pressure directly on him. He clearly in retrospect ran a too-expansive monetary policy.'' Gramley is now an adviser to Schwab SoundView Capital Markets in Washington.
Greenspan also faced political pressure early in his term. Former Treasury Secretary Nicholas Brady criticized the Fed for not lowering interest rates fast enough in 1992, when George H.W. Bush ran for a second term and lost to Bill Clinton.
Economic Hurdles
Greenspan's successor is likely to feel that kind of political pressure as long as there are economic hurdles to overcome, said Senator Richard Shelby, an Alabama Republican.
``Whoever is in there is going to face a lot of challenges,'' said Shelby, chairman of the Banking Committee, which has oversight authority on the Federal Reserve. ``There will always be political pressure, whoever the Fed chairman is, unless the economy is just robust.''
``It is going to be a period when the president will need someone who is going to work closely with the executive branch,'' said James Galbraith, an economist at the University of Texas at Austin who worked with the framers of the Full Employment and Balanced Growth Act of 1978, which reiterated the Fed's goals.
``Is there going to be a problem in getting an adequate growth rate and turning the next administration into a political success?'' Galbraith said. ``Yes.''
Nov. 10 (Bloomberg) -- Federal Reserve Chairman Alan Greenspan says the growing U.S. budget deficit could destabilize the economy. Fed Governor Susan Bies says Congress spends like it's dipping into a ``a cookie jar.'' St. Louis Fed President William Poole says Social Security is in jeopardy.
In the last two months, Greenspan and at least seven other Fed officials have warned lawmakers about tax and spending policies that have led to record budget and current account gaps.
As Greenspan, 78, in January begins his last year atop the central bank, the comments suggest Fed members are concerned his successor will have less room to guide an economic expansion should they have to raise interest rates to counter a plunging dollar or surge in spending. Fed policy makers are likely to raise the benchmark rate by a quarter point to 2 percent when they meet today in Washington, a Bloomberg News survey shows.
The policy making Open Market Committee began meeting at 9 a.m. Washington time, a Fed spokesman said. The committee's decision on interest rates is expected around 2:15 p.m.
``If you get to a point of fairly significant long-term structural budget deficits, it begins to impact on the level of long-term interest rates,'' Greenspan told the House Budget Committee on Sept. 8. That means the government must pay higher rates to borrow money, leading to even higher deficits, he said.
``If you get into that sort of debt maelstrom, it is a very difficult issue to get out of,'' he said.
Record Deficits
The Open Market Committee has already raised rates three times since June to restore its benchmark rate to a level that neither slows growth nor sparks inflation. All 89 economists surveyed by Bloomberg predicted Greenspan and the FOMC would increase the overnight rate again at today's meeting because a more-than-expected gain of 337,000 jobs in October signals the economy is starting to use up spare capacity.
Budget surpluses from 1998 to 2001 helped Greenspan orchestrate the longest economic expansion in U.S. history. When the boom ended in 2001, low inflation allowed the Fed to cut the benchmark rate to 1 percent, the lowest since 1958, limiting the recession to just eight months.
Then the surpluses evaporated. President George W. Bush, who will choose the next Fed chairman, won passage of $1.85 trillion in tax cuts and raised spending for wars in Iraq and Afghanistan. Defense spending rose 12.4 percent in fiscal 2004 to $437 billion, the Congressional Budget Office said.
The budget deficit widened to a record $413 billion in the fiscal year ended Sept. 30, with government spending rising 6.2 percent from the previous year. The deficit amounted to about 3.6 percent of the country's $11.8 trillion gross domestic product, the highest percentage since 1993.
Policy `Out of Whack'
Social Security, the main government-funded retirement program, will spend more money than it takes in starting in 2018, according to a report by the program's trustees. Unless taxes are increased or benefits cut, trust-fund assets for retirees, now at $1.4 trillion, will fall to zero by 2042. A report by trustees of Medicare, a federal health-insurance program, shows their hospital insurance fund spending will exceed income by 2012.
``There are a number of things that are just extraordinary, beginning with the fiscal imbalance,'' said Representative Jim Leach, an Iowa Republican and former head of the House Financial Services Committee, which oversees the Fed. ``The Fed has less credible discretion the more out of whack fiscal policy gets.''
Possible Successors
Bush, 58, who won re-election on Nov. 2, hasn't mentioned a likely successor to Greenspan, whose nonrenewable term as governor ends Jan. 31, 2006, after a tenure spanning four presidents.
Alan Blinder, a Fed vice chairman from June 1994 to January 1996, said possible successors include Harvard University economist Martin Feldstein, 64, a Bush adviser on Social Security, and John Taylor, 57, Treasury undersecretary for international affairs.
Blinder, a 59-year-old Princeton University economist who was an adviser to Democratic nominee John Kerry, also named Fed Governor Ben Bernanke, 50, and former Fed Governor Lawrence Lindsey, 50, as potential candidates, at a Sept. 28 meeting of the Council on Foreign Relations in Washington.
Greenspan's successor must steer the economy through the effects of deficits, high oil prices and global terrorism, Leach, 62, said.
``These are extraordinary times,'' he said. ``Virtually all the risks in the world economy are on the downside.''
Crude oil for December delivery reached a record $55.67 a barrel in New York on Oct. 25. While prices have since slipped to $47.37 a barrel yesterday, oil is still 53.4 percent higher than a year ago.
$88.5 Billion Tax
San Francisco Fed Bank President Janet Yellen, 58, said the surge would result in a temporary boost in broad inflation and, as long as prices stay high, a tax on U.S. consumers. Greenspan said that tax amounted to about $88.5 billion this year, equal to 0.75 percentage points of GDP.
Former Dallas Fed President Robert McTeer flagged the record $166.2 billion deficit in the U.S.'s current account, the broadest measure of trade, as a threat to stability.
The current-account shortfall was equal to 5.7 percent of the economy in the second quarter, up from 5.1 percent in the first three months. The U.S. needs to attract about $1.8 billion a day from overseas to plug the gap. If other nations sour on U.S. securities, the value of the dollar may plunge.
``The current account deficit is going to cause problems,'' said McTeer, 62, who resigned Nov. 4 from the Fed to run Texas A&M University in College Station, Texas. ``Flows will turn against us, and there will be a crisis that will result in rapidly rising interest rates and a rapidly depreciating dollar that will be very disruptive,'' he said on Oct. 7 at a New York event sponsored by Market News International.
Dollar Drop
Bush's pledge to make his tax cuts permanent also has traders predicting the dollar will continue to fall. The currency may fall to its lowest level ever against the euro for a second consecutive week after Bush signaled he would expand policies that fueled the deficits and the dollar's decline of about 20 percent against a basket of currencies since he took office in 2001, according to a Bloomberg News survey. Bush will also seek more funding for the war in Iraq.
Sixty percent of the traders, strategists and investors questioned on Nov. 5 from Tokyo to New York advised selling the dollar against the euro.
``A second term for Bush doesn't bode well for the dollar,'' said Samarjit Shankar, director of global foreign-exchange strategy at Mellon Financial Corp. in Boston, which manages $625 billion. ``There's no way of convincing the market additional spending on the war can be paid for if you have a lower tax base. It's a fundamental mismatch between spending and revenue.''
Can't Go On
Greenspan urged Congress on Sept. 8 to rein in spending and return to the ``pay-as-you-go'' system that was in place during President Bill Clinton's administration, whereby all new expenditures or tax cuts needed to be offset by reductions in other programs or higher fee income from government services.
``We cannot continue to just go on without saying, `We can have this, but not this,' and pay-go embodies that mechanism,'' the chairman said.
The costs of Social Security and Medicare are likely to balloon as the 84 million members of the baby-boom generation -- those born between 1946 and 1964 -- begin to retire in 2010, pushing federal government obligations higher, even as the taxpaying workforce shrinks.
``If we have promised more than our economy has the ability to deliver to retirees without unduly diminishing real income gains of workers, as I fear we may have, we must recalibrate our public programs so that pending retirees have time to adjust through other channels,'' Greenspan said in an Aug. 27 speech in Jackson Hole, Wyoming. ``If we delay, the adjustments could be abrupt and painful.'' Greenspan was chairman of the Commission on Social Security Reform from 1981 to 1983.
`Cookie Jar'
Since then, Poole, 67, of the St. Louis Fed, has made two speeches advocating an increase in the retirement age as a way to reduce the cost of Social Security.
Fed Governor Bies blamed lawmakers for sometimes spending taxpayers' money for political gain during the past four years.
``The part of it that has gotten me so upset is that in this whole election debate, nobody's been talking about the spending side,'' Bies, 57, said after a speech to investors in Rosslyn, Virginia, on Oct. 23, 10 days before the presidential election.
``If you take out Homeland Security and Defense, it has been a cookie jar over the last four years,'' she said. ``Everything has gotten loaded in. Money has gone into these appropriation bills that are funding everything under the sun.''
Another challenge facing Greenspan in his final year is the behavior of the labor market. The economy has created just 814,000 net payroll jobs since the end of the last recession in 2001, even with average annualized GDP growth of 3.3 percent. That's the slowest pace of any expansion of the last 60 years.
Presidential Pressure
Presidents and Congress have sought to influence Fed chairmen throughout the central bank's 90-year history to try to promote their own economic policies. Low interest rates can help finance budget deficits, stimulate economic growth and help offset the negative impact of tax increases.
Harry Truman, the 33rd president, invited Federal Reserve policy makers to the White House in January 1951 to try to persuade them to continue to keep yields on Treasury securities low to help finance the Korean War.
Former President Richard Nixon said he respected Arthur Burns's independence when he appointed Burns to the Fed chairmanship. Then Nixon said: ``I hope that independently he will conclude that my views are the ones he should follow,'' Fed historian Allan Meltzer, a political economy professor at Carnegie Mellon University in Pittsburgh, wrote in a recent paper.
Too Accommodating
Lyle Gramley, who worked as Burns's speechwriter before becoming a Fed governor, said: ``He'd talk to the president, and the president was concerned about where the economy was going. There was evidence of a good bit of pressure directly on him. He clearly in retrospect ran a too-expansive monetary policy.'' Gramley is now an adviser to Schwab SoundView Capital Markets in Washington.
Greenspan also faced political pressure early in his term. Former Treasury Secretary Nicholas Brady criticized the Fed for not lowering interest rates fast enough in 1992, when George H.W. Bush ran for a second term and lost to Bill Clinton.
Economic Hurdles
Greenspan's successor is likely to feel that kind of political pressure as long as there are economic hurdles to overcome, said Senator Richard Shelby, an Alabama Republican.
``Whoever is in there is going to face a lot of challenges,'' said Shelby, chairman of the Banking Committee, which has oversight authority on the Federal Reserve. ``There will always be political pressure, whoever the Fed chairman is, unless the economy is just robust.''
``It is going to be a period when the president will need someone who is going to work closely with the executive branch,'' said James Galbraith, an economist at the University of Texas at Austin who worked with the framers of the Full Employment and Balanced Growth Act of 1978, which reiterated the Fed's goals.
``Is there going to be a problem in getting an adequate growth rate and turning the next administration into a political success?'' Galbraith said. ``Yes.''
Wall Street Journal "Cisco Adds to High-Tech Worries"
Cisco Adds to High-Tech Worries
Profit Matches Estimates,But Revenue Falls Short And Outlook Is Cautious
By SCOTT THURM Staff Reporter of THE WALL STREET JOURNALNovember 10, 2004; Page A3
Computer-networking titan Cisco Systems Inc. offered new causes for worry about the strength of the high-tech recovery, with middling fiscal first-quarter results and a tepid outlook for coming months.
Cisco of San Jose, Calif., reported first-quarter revenue slightly below analysts' expectations. Orders trailed shipments. A key profit measure declined. And Cisco failed to reduce inventories that had grown rapidly in recent quarters.
Chief Executive John Chambers declared it a "good" quarter for Cisco, but said the company continues to face challenges, ranging from the hesitancy of corporations to buy technology gear to a rising wave of low-cost Asian competitors.
For the three months ended Oct. 30, Cisco said net income increased 29% to $1.4 billion, or 21 cents a share, from $1.09 billion, or 15 cents a share, a year earlier.
Revenue rose 17% to $5.97 billion from $5.1 billion a year earlier. But revenue increased less than 1% from the preceding quarter. That was consistent with Cisco's forecast, but about $50 million shy of analysts' expectations.
Profit matched expectations because Cisco held down expenses better than it projected. But even that silver lining came with a cloud: some of the decrease was the result of lower-than-projected commissions to salespeople. Chief Financial Officer Dennis Powell said he expects operating expenses to rise slightly in the current quarter ending in January, compared with the just-completed quarter.
Cisco's results add to a growing body of evidence that the strong rebound in tech spending that began about a year ago has begun to weaken. Other tech giants, including Intel Corp. and Microsoft Corp., also have felt the impact of slowing growth in corporate purchases.
Reinforcing the concerns, Cisco projected that revenue in the current quarter would increase 12% to 14% from a year earlier, slightly less than analysts had expected. Mr. Chambers said he doesn't expect customers to increase spending at the end of the year to exhaust unused technology budgets. "I expect people will be a little more conservative," he said.
CATCH OF THE QUARTER
See how 12 big companies fared during the fall earnings season.
Tim Luke, an analyst for Lehman Brothers Holdings Inc., called Cisco's forecast "somewhat uninspiring," although he noted that Cisco projected orders would outpace shipments in the current quarter.
The company reported its results after regular trading hours. In 4 p.m. Nasdaq trading, Cisco shares fell 22 cents to $19.75. In after-hours trading, Cisco shares dropped to $19.27.
Despite concerns, Cisco continued to be a cash machine, generating $1.5 billion in cash from operations. Cisco reported holding roughly $17.7 billion in cash and liquid investments, down from $19.3 billion three months ago, because of its aggressive share-repurchase program.
Cisco's gross profit margin, or sales minus the cost of producing goods sold, slipped to 67.2% of revenue, compared with 68.4% in the prior quarter. Mr. Powell said the decline was the result of increased sales of low-cost Linksys home-networking products and the introduction of new switches that direct computer traffic across corporate networks. Mr. Powell said Cisco typically introduces new products at lower-than-normal profit margins and then modifies the products to reduce production costs -- and increase profits.
Mr. Powell said inventories didn't decline, as many analysts expected, because Cisco is keeping more spare parts to support new products in areas such as security and Internet telephony. Mr. Powell said the company had reduced, by $106 million, the parts it has ordered from suppliers to keep pace with its more subdued forecast.
Profit Matches Estimates,But Revenue Falls Short And Outlook Is Cautious
By SCOTT THURM Staff Reporter of THE WALL STREET JOURNALNovember 10, 2004; Page A3
Computer-networking titan Cisco Systems Inc. offered new causes for worry about the strength of the high-tech recovery, with middling fiscal first-quarter results and a tepid outlook for coming months.
Cisco of San Jose, Calif., reported first-quarter revenue slightly below analysts' expectations. Orders trailed shipments. A key profit measure declined. And Cisco failed to reduce inventories that had grown rapidly in recent quarters.
Chief Executive John Chambers declared it a "good" quarter for Cisco, but said the company continues to face challenges, ranging from the hesitancy of corporations to buy technology gear to a rising wave of low-cost Asian competitors.
For the three months ended Oct. 30, Cisco said net income increased 29% to $1.4 billion, or 21 cents a share, from $1.09 billion, or 15 cents a share, a year earlier.
Revenue rose 17% to $5.97 billion from $5.1 billion a year earlier. But revenue increased less than 1% from the preceding quarter. That was consistent with Cisco's forecast, but about $50 million shy of analysts' expectations.
Profit matched expectations because Cisco held down expenses better than it projected. But even that silver lining came with a cloud: some of the decrease was the result of lower-than-projected commissions to salespeople. Chief Financial Officer Dennis Powell said he expects operating expenses to rise slightly in the current quarter ending in January, compared with the just-completed quarter.
Cisco's results add to a growing body of evidence that the strong rebound in tech spending that began about a year ago has begun to weaken. Other tech giants, including Intel Corp. and Microsoft Corp., also have felt the impact of slowing growth in corporate purchases.
Reinforcing the concerns, Cisco projected that revenue in the current quarter would increase 12% to 14% from a year earlier, slightly less than analysts had expected. Mr. Chambers said he doesn't expect customers to increase spending at the end of the year to exhaust unused technology budgets. "I expect people will be a little more conservative," he said.
CATCH OF THE QUARTER
See how 12 big companies fared during the fall earnings season.
Tim Luke, an analyst for Lehman Brothers Holdings Inc., called Cisco's forecast "somewhat uninspiring," although he noted that Cisco projected orders would outpace shipments in the current quarter.
The company reported its results after regular trading hours. In 4 p.m. Nasdaq trading, Cisco shares fell 22 cents to $19.75. In after-hours trading, Cisco shares dropped to $19.27.
Despite concerns, Cisco continued to be a cash machine, generating $1.5 billion in cash from operations. Cisco reported holding roughly $17.7 billion in cash and liquid investments, down from $19.3 billion three months ago, because of its aggressive share-repurchase program.
Cisco's gross profit margin, or sales minus the cost of producing goods sold, slipped to 67.2% of revenue, compared with 68.4% in the prior quarter. Mr. Powell said the decline was the result of increased sales of low-cost Linksys home-networking products and the introduction of new switches that direct computer traffic across corporate networks. Mr. Powell said Cisco typically introduces new products at lower-than-normal profit margins and then modifies the products to reduce production costs -- and increase profits.
Mr. Powell said inventories didn't decline, as many analysts expected, because Cisco is keeping more spare parts to support new products in areas such as security and Internet telephony. Mr. Powell said the company had reduced, by $106 million, the parts it has ordered from suppliers to keep pace with its more subdued forecast.
Tuesday, November 09, 2004
"Pictures Of a Stock Market Mania"
http://www.cross-currents.net/charts.htm
Most recent "free" edition. Tobin's Q discussed near end of essay, very important ratio IMHO.
My best guess, is that we a reaching at VERY least a short term top. Last few rallies during previous months were met with SCEPTICISM by the bears and some bulls as represented by the Put Call Ratio, meaning it was high as a fair amount of puts were bought for downside protection and or speculation. NOT SO this time. LOW VIX again (volatility index) below 14.
I expect more volatility to surround WED FED meeting decision around 2:15 PM. This week is a turn window for markets if STILL active. With no pull back and VERY OVERBOUGHT indicators, I must assume a high would be in place. No guarantees of that because of strength, but some kind of retracement seems due.
This is NOT a market about values, this is about MOMO and hedge funds, about buying because stocks are going up and the idea that will continue.
Weeks end money supply numbers will be interesting. I have pointed out that in recent months they have been declining, not a good sign for economy dead ahead. The numbers for the 2 weeks prior to today were UP about $38 Billion. BUT the 2 weeks prior to that, the money supply was DOWN near $80 Billion!!!
Where else do you read about this? Is why my opinion and site is important IMHO, because it is easy to see things just one way if that is all you are coming into contact with, meaning mainstream media.
Timing can be elusive, but the facts are on my side IMHO.
Well, again, if I wanted to establish some kind of LONG position, should I do it with such overbought conditions?
Duratek
Most recent "free" edition. Tobin's Q discussed near end of essay, very important ratio IMHO.
My best guess, is that we a reaching at VERY least a short term top. Last few rallies during previous months were met with SCEPTICISM by the bears and some bulls as represented by the Put Call Ratio, meaning it was high as a fair amount of puts were bought for downside protection and or speculation. NOT SO this time. LOW VIX again (volatility index) below 14.
I expect more volatility to surround WED FED meeting decision around 2:15 PM. This week is a turn window for markets if STILL active. With no pull back and VERY OVERBOUGHT indicators, I must assume a high would be in place. No guarantees of that because of strength, but some kind of retracement seems due.
This is NOT a market about values, this is about MOMO and hedge funds, about buying because stocks are going up and the idea that will continue.
Weeks end money supply numbers will be interesting. I have pointed out that in recent months they have been declining, not a good sign for economy dead ahead. The numbers for the 2 weeks prior to today were UP about $38 Billion. BUT the 2 weeks prior to that, the money supply was DOWN near $80 Billion!!!
Where else do you read about this? Is why my opinion and site is important IMHO, because it is easy to see things just one way if that is all you are coming into contact with, meaning mainstream media.
Timing can be elusive, but the facts are on my side IMHO.
Well, again, if I wanted to establish some kind of LONG position, should I do it with such overbought conditions?
Duratek
Monday, November 08, 2004
'Smell The Coffee' editorial
http://www.baltimoresun.com/news/opinion/bal-ed.econ08nov08,1,2830789.story?coll=bal-opinion-headlines
'Smell the coffee'
November 8, 2004WHAT ARE global currency traders telling Americans?
Last week, as President Bush, flush with electoral victory, confidently outlined his agenda for his second term, support for the dollar sank.
The president talked of remaking the U.S. tax code, while vowing not to raise taxes.
He talked of halving this year's record federal deficit by 2009, but didn't mention that that projection doesn't include the potential cost of the wars in Iraq and Afghanistan or scaling back an arcane but increasing important levy, the Alternative Minimum Tax - which alone could cost $500 million.
He talked of solving the looming Social Security crisis by creating private accounts, while not offering any way to offset the cost of the transition, estimated to start at $1 trillion.
And by week's end - despite good news in the latest U.S. jobs report Friday - the dollar hit a record low against the euro.
The dollar has lost more than 20 percent of its value since Mr. Bush took office, and it has fallen by more than 8 percent since its last high toward the end of April.
Said one London currency trader quoted by Bloomberg News after the favorable jobs report failed to spark a dollar rally: "There is something seriously wrong with the dollar. If you can't smell the coffee on this, I don't know what's wrong with you."
For currency traders, the strong smell comes from the record U.S. budget deficits resulting from the president's reckless cutting of taxes but not of spending.
Federal spending is $400 billion higher this year than when Mr. Bush took office, while federal tax revenue is $100 billion lower. Even if Mr. Bush does markedly lower federal deficits by 2009, they're expected to soar again - particularly if he makes permanent his tax cuts, adding another $1 trillion in debt by 2014.
Absent tax increases, there's little reason to believe that cuts in discretionary federal spending can fill the fiscal hole. Nor can economic growth. It's just much too big.
What currency traders see is a country living way beyond its means now and - President Bush's confidence aside - way into the future, a nation borrowing billions of dollars each day from foreigners and their governments to keep its government afloat and balance its trade deficit with the world.
A moderate, carefully managed decline in the dollar could help the U.S. economy's competitiveness, or at least stabilize America's growing indebtedness to the world. But the all-too-real fear is of suddenly reaching a tipping point beyond which world investors stampede from the dollar and America - resulting in a sharp dive in the dollar, harsh spikes in U.S. inflation and interest rates, and a deep plunge into recession.
In his first term, Mr. Bush appeared blind to mounting deficits. At the start of his second term, his concern does not appear appreciably heightened. Instead, Mr. Bush is offering a radically large ambition - simultaneously overhauling the tax code and Social Security. The nation must respond cautiously, lest he break its bank.
Copyright © 2004, The Baltimore Sun
'Smell the coffee'
November 8, 2004WHAT ARE global currency traders telling Americans?
Last week, as President Bush, flush with electoral victory, confidently outlined his agenda for his second term, support for the dollar sank.
The president talked of remaking the U.S. tax code, while vowing not to raise taxes.
He talked of halving this year's record federal deficit by 2009, but didn't mention that that projection doesn't include the potential cost of the wars in Iraq and Afghanistan or scaling back an arcane but increasing important levy, the Alternative Minimum Tax - which alone could cost $500 million.
He talked of solving the looming Social Security crisis by creating private accounts, while not offering any way to offset the cost of the transition, estimated to start at $1 trillion.
And by week's end - despite good news in the latest U.S. jobs report Friday - the dollar hit a record low against the euro.
The dollar has lost more than 20 percent of its value since Mr. Bush took office, and it has fallen by more than 8 percent since its last high toward the end of April.
Said one London currency trader quoted by Bloomberg News after the favorable jobs report failed to spark a dollar rally: "There is something seriously wrong with the dollar. If you can't smell the coffee on this, I don't know what's wrong with you."
For currency traders, the strong smell comes from the record U.S. budget deficits resulting from the president's reckless cutting of taxes but not of spending.
Federal spending is $400 billion higher this year than when Mr. Bush took office, while federal tax revenue is $100 billion lower. Even if Mr. Bush does markedly lower federal deficits by 2009, they're expected to soar again - particularly if he makes permanent his tax cuts, adding another $1 trillion in debt by 2014.
Absent tax increases, there's little reason to believe that cuts in discretionary federal spending can fill the fiscal hole. Nor can economic growth. It's just much too big.
What currency traders see is a country living way beyond its means now and - President Bush's confidence aside - way into the future, a nation borrowing billions of dollars each day from foreigners and their governments to keep its government afloat and balance its trade deficit with the world.
A moderate, carefully managed decline in the dollar could help the U.S. economy's competitiveness, or at least stabilize America's growing indebtedness to the world. But the all-too-real fear is of suddenly reaching a tipping point beyond which world investors stampede from the dollar and America - resulting in a sharp dive in the dollar, harsh spikes in U.S. inflation and interest rates, and a deep plunge into recession.
In his first term, Mr. Bush appeared blind to mounting deficits. At the start of his second term, his concern does not appear appreciably heightened. Instead, Mr. Bush is offering a radically large ambition - simultaneously overhauling the tax code and Social Security. The nation must respond cautiously, lest he break its bank.
Copyright © 2004, The Baltimore Sun
The Next Bush Recession
http://www.safehaven.com/article-2171.htm
by John Mauldin. Looks to me the GDP was manipulated HIGHER to make economy appear better than actual, read on.
D
by John Mauldin. Looks to me the GDP was manipulated HIGHER to make economy appear better than actual, read on.
D
Saturday, November 06, 2004
My email to Richard Russell and my Dow observations
http://stockcharts.com/def/servlet/SC.web?c=$INDU,uu[w,a]wallyiay[pb40!f][vc60][iut!Ua12,26,9!Ub14]&pref=G
Richard,
Breaking the prior peak at first might seem as a decent accomplishment, and is as far as the retracement goes......but when looking back as we can, in the context of the greater Bear Market (if we're still in one even though PTI made an alltime high) this feat is NOT that unusual, and has in the past SET UP a greater reversal.
Please note that after making the bull mkt high in 2000, the DOW managed to defeat the 40 WEEK moving average twice in 2000, once in 2001 and once in 2002 BEFORE making SIGNIFICANT DECLINES! (also these spike bettered the highs of the previous declines)
I also observe the "LOOK" of the MACD and RSI are VERY similar when this occurred. And UNLIKE the previous BULL MKT when the 40 WEEK (200 SMA) was RISING, the 40 WEEK during this Bear Market and subsequent corrections (rallies) has been in a declining to flattening projection.
ALSO, only ONE other time since 1995 has the 40 WEEK flattened out, and that was in 2000 when the DOW reached it's all time highs.....to date.
SO far, the DECLINING trendline formed from the TOPS in 2000, 2002 and 2004 is still in play, it crosses not far from where we now lay.
Your point in NOT fighting the tape (even with fundamentals as we know them) is VERY well taken and understood. My exercise was to try and put into context to what has occurred in the past to gain some insight as to what are some of the potentials. Especially since the BULLISH DIN has grown so deafening, sending many indicators not only into overbought readings on the 5 day but VERY overbought, and some on the 5 week readings.
Appreciate your insights and look forward to exploring the future with you.
Duratek
Richard,
Breaking the prior peak at first might seem as a decent accomplishment, and is as far as the retracement goes......but when looking back as we can, in the context of the greater Bear Market (if we're still in one even though PTI made an alltime high) this feat is NOT that unusual, and has in the past SET UP a greater reversal.
Please note that after making the bull mkt high in 2000, the DOW managed to defeat the 40 WEEK moving average twice in 2000, once in 2001 and once in 2002 BEFORE making SIGNIFICANT DECLINES! (also these spike bettered the highs of the previous declines)
I also observe the "LOOK" of the MACD and RSI are VERY similar when this occurred. And UNLIKE the previous BULL MKT when the 40 WEEK (200 SMA) was RISING, the 40 WEEK during this Bear Market and subsequent corrections (rallies) has been in a declining to flattening projection.
ALSO, only ONE other time since 1995 has the 40 WEEK flattened out, and that was in 2000 when the DOW reached it's all time highs.....to date.
SO far, the DECLINING trendline formed from the TOPS in 2000, 2002 and 2004 is still in play, it crosses not far from where we now lay.
Your point in NOT fighting the tape (even with fundamentals as we know them) is VERY well taken and understood. My exercise was to try and put into context to what has occurred in the past to gain some insight as to what are some of the potentials. Especially since the BULLISH DIN has grown so deafening, sending many indicators not only into overbought readings on the 5 day but VERY overbought, and some on the 5 week readings.
Appreciate your insights and look forward to exploring the future with you.
Duratek
"Second Term Realities" Doug Noland
http://www.safehaven.com/showarticle.cfm?id=2170&pv=1
DOug NOland's weekly Credit Watch is a long read, but a good one.
D
DOug NOland's weekly Credit Watch is a long read, but a good one.
D
Friday, November 05, 2004
Late night market thoughts
SUre it's late! LOL A quick note as I share my thoughts.It appears PFE is next over Celebrex, I saw a blurb ticker that Canadians have started a class action law suit
UPDATE 1-Pfizer faces Canadian suit over drug Celebrex Fri Nov 5, 2004 01:56 PM ET(Adds Pfizer providing data, Canadian government being sued, stockprice, paragraphs 6-11)OTTAWA, Nov 5 (Reuters) - A Canadian class-action lawsuit has beenlaunched against Pfizer Inc. (PFE.N: Quote, Profile, Research)alleging that its arthritis drug Celebrex caused cardiovascular side effects, the law firm launching the suit said on Friday.
FNM, AIG, MRK, SGU and many more have bitten the dust HARD....justice comes SWIFT and HARSH when dissapointments surface.I have not read FRI EWT update, I will share anything worthwhile whenI can.Don't be afraid to share any BULLISH thoughts here, we are better offif there is broad views shared...but don;t force yourself! LOL Don't ask me to put on my bull hat if no one else wants it....I am sure I can be good at it.
CPC has fallen like a meteor during this rise, so I don;t think there can be an argument for DISBELIEF from any Bears still alive andmoving around.That and the 13 VIX reading....and the plummeting TRIN......and the TRIN might be close to some kind of BEWARE signal?ALL amazing stuff, very emotional....no selling yet into face of VERYoverbought readings....almost across the board....I WANT good for goodness sake....I want a SOUND economy that I KNOW is sound not one I only wish it was....and in business I know how tosurvive....but of course I prefer wish desire good times...happytimes....sound economic times.
DID this economy CURE itself?DID this economy rid itself of the mal adjustments from prior periodor did we HEAP more upon it?AREN'T WEE between a rock and a hard place NOT a sweet spot ofinterest rates and the dollar and the NEED for the FED to keepraising short term rates?I saw blurb 48 month car loans now above 6%....have rates come down on credit cards?
DO we have savings to fall back on? If savings is near record low orbasically ZERO %.....and DEBT is alltime highs as % of everythingdisposable income GDP etc......ARE WE HEALED, and READY for takeoffto somewhere blue? without care ?Where are we in CYCLE of credit expansion? How much further can wetake it?SHOULD DOLLAR weaken in the face of near zero dollar bulls.....whatwill happen to interest rates then? THEY will skyrocket.WHEN manipulating rates SO lOW for SO LONG the FED has throwneverything out of whack!.....and like a COILED spring, and with nearrecord bond bulls.....and with ILLUSION of a strong job creatingeconomy.....rates have LOTS of room to move higher, IMHO
We have come to this place.....where the heart wants to behappy......believe a new beginning is here, a new expansion.But I am sorry try as I might, against this sea of bullish emotionthis rip tide....the FUNDAMENTALS are not here, and they never were.Where is the edge we are getting to be creating these so-called jobs?or are they again a fiction story....of adjustments...guesses?
I see SBC is laying off 10,000 workers by end of 2005.
IS depending on GOV spending a judicous use of funds....isn't thebang for the buck rather pitiful when government spends our money?Isn;t it Conservative politics to CUT spending? controlgovernment?..but under BUSH ADM it has grown like a hungry beast?....and there are NO spending cuts.
The reality is PRESSURE to interest rates should be coming from theburdon of debt in the private sector and the GOV deficits?IF necessary, what is it that stimulates the economy from here, doesanyone believe it's on auto pilot now?Take away 70,000 FLA workers (temp help to rebuild from disasters)and the 98,000 PART TIMERS....and the number today of sustainable FULL TIME workers in the BIG number comes down to size.....asmanufacturing STILL lost some jobs!!! does this all sound right toyou?....did you buy what THEY were selling you?
WHAT happened in OCT that didn;t happen in the last 36 months!!????THEY are selling this hard....but it will all get sorted out.BUSINESSES cant afford NEW WORKERS...I KNOW! I can't afford to hireanyone!MY expenses have skyrocketed...I see lots of dry cleaners and Chinese take outs opening up.....I see a NEW HUMMER dealership going up, those big taxdeductable....sensable cars.Americans don;t buy sensable cars....
Chinese raise interest rates. Russians sign KYOTO treaty....Russiansdon;t have free press anymore....under Putin, they STILL supplyNUclear know how to Iran.....Putin is our Friend!..been down to theranch...helped chop some wood.....
Only safe place for returns is the stock market right?The values are there? Doesn't the argument for higher PE ratios goMUTE because NOW we are in environment of RISING rates......isn;tthat right? The "FED" model is pure BS.....Does themarket like rising rates? does it like inflation? (see gold price) does it like deflation?
I hear a lot about (we always do)..."the money on the SIDELINES"....going to come into market....tired of just sitting around...SAFE>I do not know if bullish momentum is going to fizzle....I really don;t know.....why don't I just stop worrying.....and buy like everyone else.....do I need more reason to buy then justknowing..."stocks are going up" with or without you.
Was it sane in 1998? or early 1999...(see google dropping likestone).....so this can last as long as it wants to....as it can find willing buyers to pay more than yesterday....I don;t know.I read one poster saying...."many here (there)like to go on andon....keep it simple, it;s real simple".....I am who I am and I write like I write....if he was talking to me then....from the looks ofthis post.....
Duratek....now I can sleep (but will I be counting sheep, bulls or bears??)
UPDATE 1-Pfizer faces Canadian suit over drug Celebrex Fri Nov 5, 2004 01:56 PM ET(Adds Pfizer providing data, Canadian government being sued, stockprice, paragraphs 6-11)OTTAWA, Nov 5 (Reuters) - A Canadian class-action lawsuit has beenlaunched against Pfizer Inc. (PFE.N: Quote, Profile, Research)alleging that its arthritis drug Celebrex caused cardiovascular side effects, the law firm launching the suit said on Friday.
FNM, AIG, MRK, SGU and many more have bitten the dust HARD....justice comes SWIFT and HARSH when dissapointments surface.I have not read FRI EWT update, I will share anything worthwhile whenI can.Don't be afraid to share any BULLISH thoughts here, we are better offif there is broad views shared...but don;t force yourself! LOL Don't ask me to put on my bull hat if no one else wants it....I am sure I can be good at it.
CPC has fallen like a meteor during this rise, so I don;t think there can be an argument for DISBELIEF from any Bears still alive andmoving around.That and the 13 VIX reading....and the plummeting TRIN......and the TRIN might be close to some kind of BEWARE signal?ALL amazing stuff, very emotional....no selling yet into face of VERYoverbought readings....almost across the board....I WANT good for goodness sake....I want a SOUND economy that I KNOW is sound not one I only wish it was....and in business I know how tosurvive....but of course I prefer wish desire good times...happytimes....sound economic times.
DID this economy CURE itself?DID this economy rid itself of the mal adjustments from prior periodor did we HEAP more upon it?AREN'T WEE between a rock and a hard place NOT a sweet spot ofinterest rates and the dollar and the NEED for the FED to keepraising short term rates?I saw blurb 48 month car loans now above 6%....have rates come down on credit cards?
DO we have savings to fall back on? If savings is near record low orbasically ZERO %.....and DEBT is alltime highs as % of everythingdisposable income GDP etc......ARE WE HEALED, and READY for takeoffto somewhere blue? without care ?Where are we in CYCLE of credit expansion? How much further can wetake it?SHOULD DOLLAR weaken in the face of near zero dollar bulls.....whatwill happen to interest rates then? THEY will skyrocket.WHEN manipulating rates SO lOW for SO LONG the FED has throwneverything out of whack!.....and like a COILED spring, and with nearrecord bond bulls.....and with ILLUSION of a strong job creatingeconomy.....rates have LOTS of room to move higher, IMHO
We have come to this place.....where the heart wants to behappy......believe a new beginning is here, a new expansion.But I am sorry try as I might, against this sea of bullish emotionthis rip tide....the FUNDAMENTALS are not here, and they never were.Where is the edge we are getting to be creating these so-called jobs?or are they again a fiction story....of adjustments...guesses?
I see SBC is laying off 10,000 workers by end of 2005.
IS depending on GOV spending a judicous use of funds....isn't thebang for the buck rather pitiful when government spends our money?Isn;t it Conservative politics to CUT spending? controlgovernment?..but under BUSH ADM it has grown like a hungry beast?....and there are NO spending cuts.
The reality is PRESSURE to interest rates should be coming from theburdon of debt in the private sector and the GOV deficits?IF necessary, what is it that stimulates the economy from here, doesanyone believe it's on auto pilot now?Take away 70,000 FLA workers (temp help to rebuild from disasters)and the 98,000 PART TIMERS....and the number today of sustainable FULL TIME workers in the BIG number comes down to size.....asmanufacturing STILL lost some jobs!!! does this all sound right toyou?....did you buy what THEY were selling you?
WHAT happened in OCT that didn;t happen in the last 36 months!!????THEY are selling this hard....but it will all get sorted out.BUSINESSES cant afford NEW WORKERS...I KNOW! I can't afford to hireanyone!MY expenses have skyrocketed...I see lots of dry cleaners and Chinese take outs opening up.....I see a NEW HUMMER dealership going up, those big taxdeductable....sensable cars.Americans don;t buy sensable cars....
Chinese raise interest rates. Russians sign KYOTO treaty....Russiansdon;t have free press anymore....under Putin, they STILL supplyNUclear know how to Iran.....Putin is our Friend!..been down to theranch...helped chop some wood.....
Only safe place for returns is the stock market right?The values are there? Doesn't the argument for higher PE ratios goMUTE because NOW we are in environment of RISING rates......isn;tthat right? The "FED" model is pure BS.....Does themarket like rising rates? does it like inflation? (see gold price) does it like deflation?
I hear a lot about (we always do)..."the money on the SIDELINES"....going to come into market....tired of just sitting around...SAFE>I do not know if bullish momentum is going to fizzle....I really don;t know.....why don't I just stop worrying.....and buy like everyone else.....do I need more reason to buy then justknowing..."stocks are going up" with or without you.
Was it sane in 1998? or early 1999...(see google dropping likestone).....so this can last as long as it wants to....as it can find willing buyers to pay more than yesterday....I don;t know.I read one poster saying...."many here (there)like to go on andon....keep it simple, it;s real simple".....I am who I am and I write like I write....if he was talking to me then....from the looks ofthis post.....
Duratek....now I can sleep (but will I be counting sheep, bulls or bears??)
Thursday, November 04, 2004
Consumer DEBT an alarming problem
http://www.washingtonpost.com/ac2/wp-dyn/A10011-2004Jan12?language=printer
Surely the hole has been DUG deeper, this was written in JAN 2004.
Debt floats all boats, until it doesn't. My answer as to why or who is KEEPING rates unaturely LOW is here.
Duratek
Surely the hole has been DUG deeper, this was written in JAN 2004.
Debt floats all boats, until it doesn't. My answer as to why or who is KEEPING rates unaturely LOW is here.
Duratek
Musical Chairs
As I sit here posting, I am also searching for the vision I NEED to survive, to prosper in this most difficult, IMHO market.
4 more years of BUsh, 4 more years of what? Will the money supply be continually ramped up? (look for report dueout tomorrow for a clue, has been FLAT for 3 months, was up $20 Blast week, down $80 Billion prior 2 weeks.....Interest rates? Today not much change? Am I the only one finding that strange? In fact rates have fallen during this recent splurge...WHYwould Bonds be strong, in a rising market based on I assume good times ahead?
The one holdout to yeehaa times is the bond market? What does it see? or WHO is holding them down?In a rising tide market, why wouldn't other assets especially BONDS be sold and that put into equities?
JOBS REPORT tommorrow, hell I don't know what it will be, a miss or ahuge upside surprise...an upside surprise of oodles of jobs (even if seasonally and death birth adjusted reality) would surely throwmarket into a FRENZY?The market is not in any shape to accept any kind of UGLYnews.....the market as been rising on sniffing glue....no more worries, we have BUsh....the big corporations have BUsh....bigtobacco and asbestos claim companies have BUsh (MO up bigtoday).......financials have BUsh.....load the truck up....big pappyis here for 4 more years...NO worries.OIL is dropping....no more worries.....but the market never caresabout high oil, and rising oil mirrors rising stocks....especially ifthere is demand for energy to produce.But we don't produce much, but Transports are now close to 1998 highs.RSI on the daily for all indexes breaking above 70 and near termoverbougt, the Trannies weekly above 70 and VERY overbought. SO maybe it gets very very overbought, but a substantial trannie high appears near, IMHO....if so, do the other indexes head higher withoutit?NOT likely as it has led all indexes....watch the TRAN closely.LOTS of Gov.spending right? Bush got our back.....GOV spending hassupported our economy....well it's OUR money they are spending.
CAN the GOV keep IGNORING the deficit and stimulate the economy,doall the things it promised during the campaign....and not worry aboutcontrolling spending?WHat are the realities we face going into 2005? Could end to election worry BOOST consumer confidence to giveretailers huge Xmas?LOOK to JOB report tomorrow for some clue.Our economy seems strong, but it is not the good strong...where capital investment and then depreciation and savings are inplay....no it is consumption/debt and no savings and littleinvestment, you NEED savings for investment.ONE month during this recovery where 300,000 jobs were created...BYANY MEASURE we STILL are MIRED in the WEAKEST recovery from ANYrecession.(jobs,factory capacity,help wanted index, money velocityand more)And I worry about the levels of debt in all sectors of ourcountry....I HARP about the total credit market debt as % of GDP, andit really does not matter what majes it up, it is above any historichigh, yes above the one in 1930.What this symbolizes is the TOP of the credit expansion cycle....wellit has already topped any previous...so I cannot say it has toppeduntil it begins to decline....watch money supply figures....it at least tells me we are near an end in that area.
A PHASE of contraction would begin and so would our economy, theworlds economy.I fail to understand why globalization is so good when you LOSE a job paying $40K plus in manufacturing to a person in CHina making $3 aday? or is that $3 a week? NO HEALTH CARE, NO SS, NO Medicaid.....no environemntal concerns?The rise in housing prices from manipulated historic lows in intrates have fueled our economy......what JUICE should we expect leftin that lemmon?
We KNOW stock market is ponzi scheme, so it is unsafe to play when valuations no longer matter.NO, it's NOT safe to SHORT,but buying and holding equities without abear market bottom in place, though no it seems a silly notion, canonly bring pain.Sure you find a stock here and there of interest worth a shot....butputting in 60% of your cash seems foolish to me.The majority of the stimulus and incentive to buy forward ends thisyear.At some point the cheering will stop, the music will slow and thenstop, and investors will be forced to see who they brought to the
dance....who the last one left in the bar really looks like.A PANIC seems so far from any real possibility...and I hope itis....but never rule it out...just because you don;t know where or what it is or when it might occur...or why.
D
4 more years of BUsh, 4 more years of what? Will the money supply be continually ramped up? (look for report dueout tomorrow for a clue, has been FLAT for 3 months, was up $20 Blast week, down $80 Billion prior 2 weeks.....Interest rates? Today not much change? Am I the only one finding that strange? In fact rates have fallen during this recent splurge...WHYwould Bonds be strong, in a rising market based on I assume good times ahead?
The one holdout to yeehaa times is the bond market? What does it see? or WHO is holding them down?In a rising tide market, why wouldn't other assets especially BONDS be sold and that put into equities?
JOBS REPORT tommorrow, hell I don't know what it will be, a miss or ahuge upside surprise...an upside surprise of oodles of jobs (even if seasonally and death birth adjusted reality) would surely throwmarket into a FRENZY?The market is not in any shape to accept any kind of UGLYnews.....the market as been rising on sniffing glue....no more worries, we have BUsh....the big corporations have BUsh....bigtobacco and asbestos claim companies have BUsh (MO up bigtoday).......financials have BUsh.....load the truck up....big pappyis here for 4 more years...NO worries.OIL is dropping....no more worries.....but the market never caresabout high oil, and rising oil mirrors rising stocks....especially ifthere is demand for energy to produce.But we don't produce much, but Transports are now close to 1998 highs.RSI on the daily for all indexes breaking above 70 and near termoverbougt, the Trannies weekly above 70 and VERY overbought. SO maybe it gets very very overbought, but a substantial trannie high appears near, IMHO....if so, do the other indexes head higher withoutit?NOT likely as it has led all indexes....watch the TRAN closely.LOTS of Gov.spending right? Bush got our back.....GOV spending hassupported our economy....well it's OUR money they are spending.
CAN the GOV keep IGNORING the deficit and stimulate the economy,doall the things it promised during the campaign....and not worry aboutcontrolling spending?WHat are the realities we face going into 2005? Could end to election worry BOOST consumer confidence to giveretailers huge Xmas?LOOK to JOB report tomorrow for some clue.Our economy seems strong, but it is not the good strong...where capital investment and then depreciation and savings are inplay....no it is consumption/debt and no savings and littleinvestment, you NEED savings for investment.ONE month during this recovery where 300,000 jobs were created...BYANY MEASURE we STILL are MIRED in the WEAKEST recovery from ANYrecession.(jobs,factory capacity,help wanted index, money velocityand more)And I worry about the levels of debt in all sectors of ourcountry....I HARP about the total credit market debt as % of GDP, andit really does not matter what majes it up, it is above any historichigh, yes above the one in 1930.What this symbolizes is the TOP of the credit expansion cycle....wellit has already topped any previous...so I cannot say it has toppeduntil it begins to decline....watch money supply figures....it at least tells me we are near an end in that area.
A PHASE of contraction would begin and so would our economy, theworlds economy.I fail to understand why globalization is so good when you LOSE a job paying $40K plus in manufacturing to a person in CHina making $3 aday? or is that $3 a week? NO HEALTH CARE, NO SS, NO Medicaid.....no environemntal concerns?The rise in housing prices from manipulated historic lows in intrates have fueled our economy......what JUICE should we expect leftin that lemmon?
We KNOW stock market is ponzi scheme, so it is unsafe to play when valuations no longer matter.NO, it's NOT safe to SHORT,but buying and holding equities without abear market bottom in place, though no it seems a silly notion, canonly bring pain.Sure you find a stock here and there of interest worth a shot....butputting in 60% of your cash seems foolish to me.The majority of the stimulus and incentive to buy forward ends thisyear.At some point the cheering will stop, the music will slow and thenstop, and investors will be forced to see who they brought to the
dance....who the last one left in the bar really looks like.A PANIC seems so far from any real possibility...and I hope itis....but never rule it out...just because you don;t know where or what it is or when it might occur...or why.
D
Dow Chart to Ponder
http://stockcharts.com/def/servlet/SC.web?c=$INDU,uu[w,a]daclyiay[dd][pd20,2!c5!f][vc60][iut!Lb14!Lh14,3]&pref=G
Sometime in next few weeks or so, I will add STock Charts premium service so I can annotate my charts.
We are AT the top of downtrend channel. A breakout beyond here would HURT the bearish cause IMHO. EVEN if all the other things we can look at SCREAM TOP. I am monitoring closely.
RSI nearing oversold and we are also hitting upper BB< so there is good chance for a small pullback if not much more. IMHO
Put call ratio's have plummeted and VIX has fallen hard.
Duratek
Sometime in next few weeks or so, I will add STock Charts premium service so I can annotate my charts.
We are AT the top of downtrend channel. A breakout beyond here would HURT the bearish cause IMHO. EVEN if all the other things we can look at SCREAM TOP. I am monitoring closely.
RSI nearing oversold and we are also hitting upper BB< so there is good chance for a small pullback if not much more. IMHO
Put call ratio's have plummeted and VIX has fallen hard.
Duratek
SPX/VIX RATIO
http://stockcharts.com/def/servlet/SC.web?c=$SPX:$VIX,uu[w,a]wallyiay[pb50!d20,2!f][vc60][iut!Ub14!La12,26,9]&pref=G
This is ONE tool I like to use to guage sentiment. AFter declining th si ratio is right back into area of the highest readings I have seen recorded, even during 20 year Bull Market. And I choose to find that significant!
WHat I Observe during the preceding Bull market is that this ratio was showing a FAIR amount of "PESSIMISM" (the lower the number the higher the relative VIX is as compared to price of stocks).....and stocks TOPPED, MAJOR top in 2000 with a LOWER reading than we have seen here recently.
I don't see how another MAJOR advance in stocks can occur if this relationship persists.
Today the VIX droped like a stone back to a reading of around 13 !! NO FEAR, clear sailing ahead?
NO ONE expects a serious decline anywhere in our immediate to near term future, IMHO
D
This is ONE tool I like to use to guage sentiment. AFter declining th si ratio is right back into area of the highest readings I have seen recorded, even during 20 year Bull Market. And I choose to find that significant!
WHat I Observe during the preceding Bull market is that this ratio was showing a FAIR amount of "PESSIMISM" (the lower the number the higher the relative VIX is as compared to price of stocks).....and stocks TOPPED, MAJOR top in 2000 with a LOWER reading than we have seen here recently.
I don't see how another MAJOR advance in stocks can occur if this relationship persists.
Today the VIX droped like a stone back to a reading of around 13 !! NO FEAR, clear sailing ahead?
NO ONE expects a serious decline anywhere in our immediate to near term future, IMHO
D
Andre Gratian's Morning call
Thursday 11/4 - Morning Comment
Looks like more consolidation of recent gains ahead. To make communication clearer, I am going to define a couple of terms. Consolidation is basically a sideways movement. A correction is a deeper retracement of the prevailing trend. Neither is a reversal of the existing trend. However, they could lead to a reversal of the trend if they are not followed by a continuation of the trend in fairly short order.
The QQQ is not participating as much in the rally as is the SPX and Dow. This is not a concern at this point. I mentioned earlier that the Dow and the SPX were playing catch up. Now they have caught up. If the divergence persists, it would become a concern.
After some consolidation/correction we should have another stab at the overhead resistance mentioned yesterday. This is when we will be able to tell if the short term uptrend can continue or needs a deeper correction.
Andre
Looks like more consolidation of recent gains ahead. To make communication clearer, I am going to define a couple of terms. Consolidation is basically a sideways movement. A correction is a deeper retracement of the prevailing trend. Neither is a reversal of the existing trend. However, they could lead to a reversal of the trend if they are not followed by a continuation of the trend in fairly short order.
The QQQ is not participating as much in the rally as is the SPX and Dow. This is not a concern at this point. I mentioned earlier that the Dow and the SPX were playing catch up. Now they have caught up. If the divergence persists, it would become a concern.
After some consolidation/correction we should have another stab at the overhead resistance mentioned yesterday. This is when we will be able to tell if the short term uptrend can continue or needs a deeper correction.
Andre
Wednesday, November 03, 2004
A BULLISH 2005?
http://news.goldseek.com/ClifDroke/1099510651.php
AM I out of my mind you ask? NO, but I think it always WISE to read the view from both sides of the fence.
And when you look at where you stand and why, you will either change your view or be more committed than before, more solid in how you feel.
And NOBODY knows what tomorrow brings, NOBODY.
a STRONG 2005 means another year of cyclical bull in a secular? bear which NEVER bottomed.
D
AM I out of my mind you ask? NO, but I think it always WISE to read the view from both sides of the fence.
And when you look at where you stand and why, you will either change your view or be more committed than before, more solid in how you feel.
And NOBODY knows what tomorrow brings, NOBODY.
a STRONG 2005 means another year of cyclical bull in a secular? bear which NEVER bottomed.
D
UN-PLUGGED
http://www.fool.com/News/mft/2004/mft04110113.htm?source=eptyholnk303100&logvisit=y&npu=y
IF indeed fuel cell economy WILL be reality, one thing MANY agree upon, these companies will "BURN" through their cash and need additional financing, which usually leads to investor equity dilution. Something to consider.
D
IF indeed fuel cell economy WILL be reality, one thing MANY agree upon, these companies will "BURN" through their cash and need additional financing, which usually leads to investor equity dilution. Something to consider.
D
Stephen Roach "The Day After Tomorrow" READ THIS!
**(This is one of the most respected economic writers of our time, and most read, he is a fellow Contrarian. POWERFUL are the points he makes about what lies ahead for all of us, in an imbalanced world, and economy. Lie to us, push back the future is NO longer an option, we have reached the END of our tether in many ways! Roach speaks to me on MANY levels. I believe as wonderful as WALL STREET would have you beleive a BUsh victory is, in the end, his style of leadership and inability to compromise, the direction we are being led.....this is ALL coming to a head) Duratek
"The Day After Tomorrow" Stephen Roach
Unlike most of my fellow citizens, November 3 will not find me waking up at home to “morning in America.” Instead, I’ll be spending a sleepless night on yet another airplane, full of apprehension over the outcome of a bitterly contested presidential election. Hopefully, the morning after will bring a clear-cut verdict. Whatever your preference, another cloud of ambiguity is the last thing the world’s greatest democracy needs. Yet with Wednesday morning also comes the proverbial cold shower -- a wake-up call that cuts through the fiction of campaign rhetoric and focuses on the heavy lifting that now lies ahead. My concern is that whoever wins, the next four years are going to be unusually challenging from the standpoint of America’s economic stewardship. We can only hope that the victor is up to the task.
In the financial markets, we endlessly debate the prognosis for next quarter’s numbers -- GDP, earnings, inflation, and the like. Our fixation on the here and now reflects both the difficulties of longer-term forecasting as well as the short-termism of the investment community. Each quarter that we escape a problem, the greater the comfort level as to what lies ahead. Such myopic risk assessment misses the forest for the trees. In my view, the US economy is an accident waiting to happen. That’s the message to be taken from a record shortfall in national saving, a record current-account deficit, record levels of household indebtedness, a record deficiency of personal saving, and outsize government budget deficits. The emphasis is on the word “record.” Never before has the United States pushed the envelope to this degree on such a wide array of economic imbalances.
The politicians haven’t touched these issues in Campaign 2004. That’s hardly surprising. After all, the resolution of imbalances may actually imply some personal economic sacrifice -- not exactly the approach that attracts votes. Just ask Jimmy Carter or Walter Mondale. But the campaign is now over. The rhetorical flourishes hopefully will subside. And America will wake up the day after tomorrow with the most daunting economic agenda it has faced in a generation. Then, the real debate can begin.
I continue to believe that the national saving construct offers the most comprehensive framework to understand many of America’s toughest economic challenges. I focus, in particular, on the net national saving rate -- the combined saving of households, businesses, and the government sector. For, macro purposes, such saving is best viewed in “net” terms -- that is, after subtracting out that portion of gross saving that goes toward depreciation, or the replacement of worn-out or obsolete capital stock. It is a basic accounting rule of economics that saving must always equal investment. The net national saving rate provides a clear sense of how much society is setting aside out of current income generation in order to fund the net growth in new productive capacity -- the sustenance of future economic growth.
The verdict from America’s net national saving rate is nothing short of frightening: It fell to a record low of 0.4% in early 2003 and has since rebounded to just 1.9% as of mid-2004. While official 3Q04 estimates are not yet available, a sharp plunge in the personal saving rate to 0.4% (from 1.2% in the second quarter), in conjunction with diminished corporate profits growth and outsize government budget deficits, points to a further decline in overall national saving. These trends leave America’s net national saving rate in the 1-2% range over the 2003-04 period -- all-time lows by any standard. Such anemic saving speaks of a nation that is living well beyond its means, as those means are defined by America’s domestic income generating capacity. A record-low saving rate also ties together many of America’s other economic problems:
* Current-account gap. Lacking in domestic saving, America imports foreign saving to fund economic growth. The US must run massive current account deficits to attract that capital. With the external deficit having risen to 5.7% of GDP, the US is now absorbing over 80% of the world’s surplus saving -- requiring $2.6 billion of capital inflows each business day to fund its domestic saving shortfall.
* Budget deficit. Budget deficits matter much more when the private sector doesn’t save. Lacking in private saving -- especially personal saving -- the unprecedented shift in the Federal budget deficit has accounted for the bulk of the recent shortfall in national saving. Unlike the late 1990s, when “good” current account deficits were needed to fund a US investment boom, today’s “bad” external deficits arise out of a need to fund both government and personal profligacy.
* The asset economy. Private saving rates are down, in large part, because households and businesses view asset appreciation as a proxy for long term saving. Yet the fragility of asset markets draws this key presumption into question. That was certainly the lesson of the equity bubble of the late 1990s and could well be the case if the current property bubble bursts.
* Household debt. Asset appreciation has been diverted away from saving and increasingly used as a means to fund current consumption. Yet such purchasing power can only be extracted from property by debt accumulation. This has taken household indebtedness to record highs; over the past four years, the expansion of household liabilities has been fully 65% larger than the growth in America’s overall GDP.
* Productivity risks. With outsize government budget deficits and no personal saving, there is little net saving left over to finance productivity-enhancing business capital spending. This has already taken a worrisome toll. Stripping out depreciation of obsolete capacity, net investment in the business sector in 2003 was 60% below levels prevailing in 2000 -- a serious warning flag on the productivity front.
* Trade frictions and protectionism. As stressed above, rock-bottom national saving spells massive current-account deficits. Not surprisingly, a record trade deficit accounted for fully 92% of America’s current account deficit. Consequently, courtesy of America’s fiscal profligacy, trade deficits, for all practical purposes, are made in Washington. And so, too, is the heightened import penetration that puts pressure on domestic job creation and spawns protectionist risks.
* Demographic perils. Savings imperatives are all the more urgent as America’s aging generation of baby-boomers now nears retirement. In 2000, 12.4% of the total US population was 65 years and older. Over the next 25 years, this ratio is projected to explode by nearly 50% to 18.2%. The implications of a record shortfall of domestic saving are all the more vexing in the context of this demographic time bomb.
The task ahead is not to bemoan the past but to address what needs to be done to face a very challenging and risky future. The national saving framework provides some obvious and important answers. First, fix the budget deficit. This has been the major swing factor in the stunning erosion of US domestic saving over the past four years. Political posturing on matters of tax reform or entitlements expansion must now be put aside in the post-election period; tax increases and expenditure cuts -- however unpopular -- are the only way out. Politicians, of course, don’t want to tell you that. Yet a saving short- US economy is utterly incapable of growing its way of a deep budget hole. The heavy lifting of deficit reduction is an urgent imperative -- especially in the early months of any political cycle.
Second, let the dollar go. For an unbalanced world, rebalancing can only occur through a change in relative prices. The dollar is the world’s most important relative price, and, in my view, it has nowhere to go but down. Dollar depreciation is also part and parcel of a classic current account adjustment. A weaker dollar will inevitably lead to higher US real interest rates -- providing long overdue restraint to interest-rate sensitive and asset-driven spending of American consumers and businesses. That will then lead to a rebuilding of national saving, thereby lessening the need to run large current-account and trade deficits that have, in turn, led to heightened protectionist risks. A weaker dollar will also put long overdue pressure on the rest of the world to stimulate its own domestic demand -- both by embracing structural reforms and by backing away from the increasingly reckless and destabilizing recycling of foreign exchange reserves into dollar-denominated assets.
There are no quick fixes for America. Yet political campaigns are designed to give voters just such an impression. The day after tomorrow, this charade should come to an end. And just in time, I might add. In my view, 2005 could well be a year when many of America’s imbalances reach their tipping point. A failure to act would be the greatest tragedy of all. Looking at America’s problems through the lens of subpar saving suggests that deficit reduction and a weaker dollar should be at the top of the list of potential remedies -- remedies that, by the way, will have critical implications for world financial markets. Certainly, more can be done. But I can’t think of a better place to start.
On a personal note, I have to add that I have found this election campaign deeply disturbing. The tone of the debate is what troubles me the most. It has fanned a polarization in America and around the world that is right out of some of the darkest pages of history. It didn’t have to be that way. Out of the devastating tragedy of September 11 came a remarkable spirit of bipartisan solidarity. America was united and the world came together -- not just in grief and sorrow but also in hope for collective renewal. I remember being stuck in Europe in the days immediately after the attack on America, unable to return home at a time when I wanted nothing more. I was warmly embraced by our long steadfast allies, with a compassion and sincerity that deeply touched me. Their hearts were open and caring. Their home was my home.
That spirit has been squandered. Americans are at odds with one another, with a deep and worrisome intensity. And the world sees us in a stark, adversarial light. The cynics say this is just politics -- that such divisiveness is the norm, especially during times of war. I beg to differ. Today, polarization is playing on the character of America -- in the end, any nation’s most precious asset. Sadly, that character is now at risk, both at home and abroad. As dawn breaks the day after tomorrow, that will be the first thing on my mind.
"The Day After Tomorrow" Stephen Roach
Unlike most of my fellow citizens, November 3 will not find me waking up at home to “morning in America.” Instead, I’ll be spending a sleepless night on yet another airplane, full of apprehension over the outcome of a bitterly contested presidential election. Hopefully, the morning after will bring a clear-cut verdict. Whatever your preference, another cloud of ambiguity is the last thing the world’s greatest democracy needs. Yet with Wednesday morning also comes the proverbial cold shower -- a wake-up call that cuts through the fiction of campaign rhetoric and focuses on the heavy lifting that now lies ahead. My concern is that whoever wins, the next four years are going to be unusually challenging from the standpoint of America’s economic stewardship. We can only hope that the victor is up to the task.
In the financial markets, we endlessly debate the prognosis for next quarter’s numbers -- GDP, earnings, inflation, and the like. Our fixation on the here and now reflects both the difficulties of longer-term forecasting as well as the short-termism of the investment community. Each quarter that we escape a problem, the greater the comfort level as to what lies ahead. Such myopic risk assessment misses the forest for the trees. In my view, the US economy is an accident waiting to happen. That’s the message to be taken from a record shortfall in national saving, a record current-account deficit, record levels of household indebtedness, a record deficiency of personal saving, and outsize government budget deficits. The emphasis is on the word “record.” Never before has the United States pushed the envelope to this degree on such a wide array of economic imbalances.
The politicians haven’t touched these issues in Campaign 2004. That’s hardly surprising. After all, the resolution of imbalances may actually imply some personal economic sacrifice -- not exactly the approach that attracts votes. Just ask Jimmy Carter or Walter Mondale. But the campaign is now over. The rhetorical flourishes hopefully will subside. And America will wake up the day after tomorrow with the most daunting economic agenda it has faced in a generation. Then, the real debate can begin.
I continue to believe that the national saving construct offers the most comprehensive framework to understand many of America’s toughest economic challenges. I focus, in particular, on the net national saving rate -- the combined saving of households, businesses, and the government sector. For, macro purposes, such saving is best viewed in “net” terms -- that is, after subtracting out that portion of gross saving that goes toward depreciation, or the replacement of worn-out or obsolete capital stock. It is a basic accounting rule of economics that saving must always equal investment. The net national saving rate provides a clear sense of how much society is setting aside out of current income generation in order to fund the net growth in new productive capacity -- the sustenance of future economic growth.
The verdict from America’s net national saving rate is nothing short of frightening: It fell to a record low of 0.4% in early 2003 and has since rebounded to just 1.9% as of mid-2004. While official 3Q04 estimates are not yet available, a sharp plunge in the personal saving rate to 0.4% (from 1.2% in the second quarter), in conjunction with diminished corporate profits growth and outsize government budget deficits, points to a further decline in overall national saving. These trends leave America’s net national saving rate in the 1-2% range over the 2003-04 period -- all-time lows by any standard. Such anemic saving speaks of a nation that is living well beyond its means, as those means are defined by America’s domestic income generating capacity. A record-low saving rate also ties together many of America’s other economic problems:
* Current-account gap. Lacking in domestic saving, America imports foreign saving to fund economic growth. The US must run massive current account deficits to attract that capital. With the external deficit having risen to 5.7% of GDP, the US is now absorbing over 80% of the world’s surplus saving -- requiring $2.6 billion of capital inflows each business day to fund its domestic saving shortfall.
* Budget deficit. Budget deficits matter much more when the private sector doesn’t save. Lacking in private saving -- especially personal saving -- the unprecedented shift in the Federal budget deficit has accounted for the bulk of the recent shortfall in national saving. Unlike the late 1990s, when “good” current account deficits were needed to fund a US investment boom, today’s “bad” external deficits arise out of a need to fund both government and personal profligacy.
* The asset economy. Private saving rates are down, in large part, because households and businesses view asset appreciation as a proxy for long term saving. Yet the fragility of asset markets draws this key presumption into question. That was certainly the lesson of the equity bubble of the late 1990s and could well be the case if the current property bubble bursts.
* Household debt. Asset appreciation has been diverted away from saving and increasingly used as a means to fund current consumption. Yet such purchasing power can only be extracted from property by debt accumulation. This has taken household indebtedness to record highs; over the past four years, the expansion of household liabilities has been fully 65% larger than the growth in America’s overall GDP.
* Productivity risks. With outsize government budget deficits and no personal saving, there is little net saving left over to finance productivity-enhancing business capital spending. This has already taken a worrisome toll. Stripping out depreciation of obsolete capacity, net investment in the business sector in 2003 was 60% below levels prevailing in 2000 -- a serious warning flag on the productivity front.
* Trade frictions and protectionism. As stressed above, rock-bottom national saving spells massive current-account deficits. Not surprisingly, a record trade deficit accounted for fully 92% of America’s current account deficit. Consequently, courtesy of America’s fiscal profligacy, trade deficits, for all practical purposes, are made in Washington. And so, too, is the heightened import penetration that puts pressure on domestic job creation and spawns protectionist risks.
* Demographic perils. Savings imperatives are all the more urgent as America’s aging generation of baby-boomers now nears retirement. In 2000, 12.4% of the total US population was 65 years and older. Over the next 25 years, this ratio is projected to explode by nearly 50% to 18.2%. The implications of a record shortfall of domestic saving are all the more vexing in the context of this demographic time bomb.
The task ahead is not to bemoan the past but to address what needs to be done to face a very challenging and risky future. The national saving framework provides some obvious and important answers. First, fix the budget deficit. This has been the major swing factor in the stunning erosion of US domestic saving over the past four years. Political posturing on matters of tax reform or entitlements expansion must now be put aside in the post-election period; tax increases and expenditure cuts -- however unpopular -- are the only way out. Politicians, of course, don’t want to tell you that. Yet a saving short- US economy is utterly incapable of growing its way of a deep budget hole. The heavy lifting of deficit reduction is an urgent imperative -- especially in the early months of any political cycle.
Second, let the dollar go. For an unbalanced world, rebalancing can only occur through a change in relative prices. The dollar is the world’s most important relative price, and, in my view, it has nowhere to go but down. Dollar depreciation is also part and parcel of a classic current account adjustment. A weaker dollar will inevitably lead to higher US real interest rates -- providing long overdue restraint to interest-rate sensitive and asset-driven spending of American consumers and businesses. That will then lead to a rebuilding of national saving, thereby lessening the need to run large current-account and trade deficits that have, in turn, led to heightened protectionist risks. A weaker dollar will also put long overdue pressure on the rest of the world to stimulate its own domestic demand -- both by embracing structural reforms and by backing away from the increasingly reckless and destabilizing recycling of foreign exchange reserves into dollar-denominated assets.
There are no quick fixes for America. Yet political campaigns are designed to give voters just such an impression. The day after tomorrow, this charade should come to an end. And just in time, I might add. In my view, 2005 could well be a year when many of America’s imbalances reach their tipping point. A failure to act would be the greatest tragedy of all. Looking at America’s problems through the lens of subpar saving suggests that deficit reduction and a weaker dollar should be at the top of the list of potential remedies -- remedies that, by the way, will have critical implications for world financial markets. Certainly, more can be done. But I can’t think of a better place to start.
On a personal note, I have to add that I have found this election campaign deeply disturbing. The tone of the debate is what troubles me the most. It has fanned a polarization in America and around the world that is right out of some of the darkest pages of history. It didn’t have to be that way. Out of the devastating tragedy of September 11 came a remarkable spirit of bipartisan solidarity. America was united and the world came together -- not just in grief and sorrow but also in hope for collective renewal. I remember being stuck in Europe in the days immediately after the attack on America, unable to return home at a time when I wanted nothing more. I was warmly embraced by our long steadfast allies, with a compassion and sincerity that deeply touched me. Their hearts were open and caring. Their home was my home.
That spirit has been squandered. Americans are at odds with one another, with a deep and worrisome intensity. And the world sees us in a stark, adversarial light. The cynics say this is just politics -- that such divisiveness is the norm, especially during times of war. I beg to differ. Today, polarization is playing on the character of America -- in the end, any nation’s most precious asset. Sadly, that character is now at risk, both at home and abroad. As dawn breaks the day after tomorrow, that will be the first thing on my mind.
Scaeffer on SHORT Interest PLUNGE
http://www.schaeffersresearch.com/commentary/bernie_observations.aspx?ID=11622
Is this MORE fuel to consider even with futures SPIKE 1142 will hold?
Is this MORE fuel to consider even with futures SPIKE 1142 will hold?
Tuesday, November 02, 2004
My AM Market call from another board
From: "duratek" <duratek@y...> Date: Tue Nov 2, 2004 11:05 am Subject: LOOK for trend reversal by tomorrow
http://tinyurl.com/3o2hs Transports are now diverging from theothers rise, down about 60 pts. and the TRAN is OVERBOUGHT on theWEEKLY.The OBVIOUS is the rally, the underbelly is the 1142 SPX reistance....and the wrong bet that a clear election winner makes for clear sailing in this troubled unbalanced debt laden non job growing, wage stagnant, rising costs economy.
D
http://tinyurl.com/3o2hs Transports are now diverging from theothers rise, down about 60 pts. and the TRAN is OVERBOUGHT on theWEEKLY.The OBVIOUS is the rally, the underbelly is the 1142 SPX reistance....and the wrong bet that a clear election winner makes for clear sailing in this troubled unbalanced debt laden non job growing, wage stagnant, rising costs economy.
D
10 YEAR VIEW of PREVIOUS CHART
http://tinyurl.com/4f9qk
We hit levels in this chart NOT even seen in over 10 years! Is this where we should LOOK to start a serious BULL MARKET?
Observe where it was in the 90's.
D
We hit levels in this chart NOT even seen in over 10 years! Is this where we should LOOK to start a serious BULL MARKET?
Observe where it was in the 90's.
D
A RATIO Worth Watching
http://tinyurl.com/6peaj
ABove ratio correctly called the MArch 2003 bottom, and you can see the 50 SMA crossover up through the 200 SMA (simple moving avg).
And the current reading has come from an area where PAST TOPS have been, it has been as high as 90 and is now consolidating here.
IMHO, we can call a near term top in this market with "some" degree of confidence, when we get a DECISIVE break of the 50 SMA BELOW the 200 SMA.
WHat this will reflect would be a falling market and a rise in volatility, perhaps reflecting a more defensive posture especially by the options writers.
For now that is uncertain, but at least we are honing in on a few things that will help us determine market direction and risk. Stay tuned.
AT this point, MOST are positioned for market rise this time of year. If one sided enough, the COntrarian position like has been taken by Commercial traders on gold and the dollar could be the correct one.
Duratek
ABove ratio correctly called the MArch 2003 bottom, and you can see the 50 SMA crossover up through the 200 SMA (simple moving avg).
And the current reading has come from an area where PAST TOPS have been, it has been as high as 90 and is now consolidating here.
IMHO, we can call a near term top in this market with "some" degree of confidence, when we get a DECISIVE break of the 50 SMA BELOW the 200 SMA.
WHat this will reflect would be a falling market and a rise in volatility, perhaps reflecting a more defensive posture especially by the options writers.
For now that is uncertain, but at least we are honing in on a few things that will help us determine market direction and risk. Stay tuned.
AT this point, MOST are positioned for market rise this time of year. If one sided enough, the COntrarian position like has been taken by Commercial traders on gold and the dollar could be the correct one.
Duratek
Monday, November 01, 2004
FUEL CELL ECONOMY
**I think one of the greatest potential investment areas will be Fuel Cells. ANyone interested in my list please email me and I will happily send it to you. Of course this is JUST my opinion, and I am not offering advice, but if interested in seeing the companies involved in this area I have found, let me know, Duratek
Fuel cell sales up 41% in 2002-03 span Investments in R&D climb 13%, eclipsing industry sales
By Stephanie I. Cohen, CBS MarketWatchLast Update: 11:36 AM ET Nov. 1, 2004
WASHINGTON (CBS.MW) -- Companies involved in the development and manufacture of fuel cells reported a jump in sales of 41 percent, to $338 million, in 2003, according to an industry analysis by PricewaterhouseCoopers.
The increase compared to $240 million in sales in 2002, the analysis said.
Automotive manufacturers believe that vehicles powered by fuel cells -- which are more efficient than those that run on gasoline -- could become a commercial reality over the next two decades.
Fuel cells work by using hydrogen and oxygen to create a chemical reaction that produces electricity, rather than burning fossil fuels.
Investments in research and development for the 170 companies participating in the study increased by 13 percent to $859 million in 2003 from $764 million in 2002.
The boon in sales hasn't, however, lead to a surge in hiring, the report said. Industry employees remained relatively constant at 7,748 in 2003 compared with 7,750 in 2002.
Participants in the survey included both publicly held and privately owned companies located in North America, Europe and Asia. Fuel cell businesses are prominent in the United States, Canada, Japan and Germany, the report noted.
Two-thirds of the companies surveyed said they have been involved in the fuel cell industry for at least 10 years.
U.S.-based companies in the survey reported an increase in sales of 36 percent to $119 million between 2002 and 2003, along with a 62 percent jump in R&D spending to $460 million.
U.S. fuel cell companies include ChevronTexaco Technology Ventures (CVX: news, chart, profile), ConocoPhillips (COP: news, chart, profile), DaimlerChrysler (DCX: news, chart, profile), General Motors Corp. (GM: news, chart, profile), DuPont Fuel Cells (DD: news, chart, profile), and Dow Corning, the joint venture between Dow Chemical (DOW: news, chart, profile) and Corning (GLW: news, chart, profile).
A recent report by ABI Research indicates that the global fuel cell market, which will likely be "nominal" in 2004, could reach $35 billion by 2013.
Stephanie I. Cohen is a reporter for CBS MarketWatch in Washington.
Fuel cell sales up 41% in 2002-03 span Investments in R&D climb 13%, eclipsing industry sales
By Stephanie I. Cohen, CBS MarketWatchLast Update: 11:36 AM ET Nov. 1, 2004
WASHINGTON (CBS.MW) -- Companies involved in the development and manufacture of fuel cells reported a jump in sales of 41 percent, to $338 million, in 2003, according to an industry analysis by PricewaterhouseCoopers.
The increase compared to $240 million in sales in 2002, the analysis said.
Automotive manufacturers believe that vehicles powered by fuel cells -- which are more efficient than those that run on gasoline -- could become a commercial reality over the next two decades.
Fuel cells work by using hydrogen and oxygen to create a chemical reaction that produces electricity, rather than burning fossil fuels.
Investments in research and development for the 170 companies participating in the study increased by 13 percent to $859 million in 2003 from $764 million in 2002.
The boon in sales hasn't, however, lead to a surge in hiring, the report said. Industry employees remained relatively constant at 7,748 in 2003 compared with 7,750 in 2002.
Participants in the survey included both publicly held and privately owned companies located in North America, Europe and Asia. Fuel cell businesses are prominent in the United States, Canada, Japan and Germany, the report noted.
Two-thirds of the companies surveyed said they have been involved in the fuel cell industry for at least 10 years.
U.S.-based companies in the survey reported an increase in sales of 36 percent to $119 million between 2002 and 2003, along with a 62 percent jump in R&D spending to $460 million.
U.S. fuel cell companies include ChevronTexaco Technology Ventures (CVX: news, chart, profile), ConocoPhillips (COP: news, chart, profile), DaimlerChrysler (DCX: news, chart, profile), General Motors Corp. (GM: news, chart, profile), DuPont Fuel Cells (DD: news, chart, profile), and Dow Corning, the joint venture between Dow Chemical (DOW: news, chart, profile) and Corning (GLW: news, chart, profile).
A recent report by ABI Research indicates that the global fuel cell market, which will likely be "nominal" in 2004, could reach $35 billion by 2013.
Stephanie I. Cohen is a reporter for CBS MarketWatch in Washington.
"The Moment of Truth for Productivity"
http://www.contraryinvestor.com/mo.htm November Contrary Investor. ALWAYS a good read, and great charts.
Duratek
Duratek
Nothing PERSONAL in this AM'S Data
http://www.briefing.com/Silver/Calendars/EconomicReleases/income.htm
Note the direction of spending and income,where spending/consumption tends to follow income,Y/Y showing declining trend. Data revised DOWNWARD previous report.
Also note the historical LOWS in SAVINGS RATE, this I find VERY disturbing but telling. Can we then conclude the economy is being supported by nothingmore than credit/debt?
POWERFUL is an economy supported by strong savings and investment based of such.
D
Note the direction of spending and income,where spending/consumption tends to follow income,Y/Y showing declining trend. Data revised DOWNWARD previous report.
Also note the historical LOWS in SAVINGS RATE, this I find VERY disturbing but telling. Can we then conclude the economy is being supported by nothingmore than credit/debt?
POWERFUL is an economy supported by strong savings and investment based of such.
D
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