*Update alert....4 week moving average of claims VAULTS 14,000 to 472,000. weekly claims surprises to upside at 484,000.....export prices continue to FALL.
I am sorry to say a DEFLATIONARY one. That is obvious isn't it? So current FED strategy will not do any more than the previous FED strategy, and we still have the debts and mistakes of OTHERS foisted over to US without much to show for it.
What I think many don't understand is it IS different this time, we are not suffering from the classic Recessionary issues, but from those of a credit bubble cycle.....maybe last seen in 1930.
If you look closely to the data coming out, it really hasn't improved all that much from the period ending in early 2009, yet stocks are up 75% or so......which asset can now appreciate to support expanding consumer spending? Then how much more can the Gov be expected to do to stimulate with funds it doesn't have? This is not just a US phenom and I thnk is why the US $ may not be ripe for extinction just yet, will the Euro replace it? I don't think so just yet.
The race for yield has been on and AGAIN Bonds are outpacing most others in gains, but the yields are getting rather skimpy with the 10 yr dipping to 2.7% ......what seems like a very crowded trade just keeps getting more crowded....some say 1.5% yield within next year is possible....before that bull mkt ends.
SOme also reccomend looking at QUALITY CORPORATE BONDS as an option (consult your financial advisor).
In an up and down market that has gone nowhere in 10 years, allocation is key IMHO, NOT LTBH.......and we could be in for 10 years of corrective activity AFTER the bubble burst around 2007.....or longer
How much can the shorts be counted on at these levels to cover and support market? more likely these areas may attract more of their kind.
With little improvement in housing and employment, this close to the coming xmas season.....what outlook can retailers possibly have?
As many EXPERTS call this a recovery, NBER has not declared Recession over.....
You understand what can drive an economy, it's not the public sector....its the private sector. TOO MUCH IS IN LIMBO, TOO MUCH UNCERTAINTY....about costs and taxes.
Investment in future business does not like uncertainty.
We must stop trying to create jobs with GOV spending and hiring and resuscitate small business.
Freddie and Fannie doing so good....they need another $2B from US.
The "recovery" has been unlike others in the past by this time, and it seems in almost any measure to be descelerating, and IMHO the chance corporate profits can continue to surprise upward are getting slimmer and slimmer.
Yesterday was another in a series of 90% down volume days, puncuated by some 90% upside days, but there have been more downside volume days and in a new bull mkt that seems rather odd....
D
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On Thursday August 12, 2010, 6:24 am EDT
http://finance.yahoo.com/news/Debts-Rise-and-Go-Unpaid-as-nytimes-1192042479.html?x=0&sec=topStories&pos=4&asset=&ccode=
PHOENIX — During the great housing boom, homeowners nationwide borrowed a trillion dollars from banks, using the soaring value of their houses as security. Now the money has been spent and struggling borrowers are unable or unwilling to pay it back.
The delinquency rate on home equity loans is higher than all other types of consumer loans, including auto loans, boat loans, personal loans and even bank cards like Visa and MasterCard, according to the American Bankers Association.
Lenders say they are trying to recover some of that money but their success has been limited, in part because so many borrowers threaten bankruptcy and because the value of the homes, the collateral backing the loans, has often disappeared.
You are right. Bond market is getting crowded. Corporate bonds will not do well in the upcoming deflation. People lost money in the tech bubble, then real estate bubble, then stock market bubble. Now cautious they are piling into "safe" bonds. Right! Once that trade is crowded they will be taken to the woodshed.
Municipal bonds are a definite no no. Most states are close to bankruptcy. Junk bonds of course will be toast. The last one to fall will be US government bonds of course. With current spending levels of 1.3 trillion and more yearly that wont take long.
Over the next few years the only thing that will keep its purchasing power is the one that people despise. Yes the greenback. As long as deleveraging continues and in spite of the best efforts of the Fed the dollar will rise. Once the deleveraging is done and US government reaches the tipping point in spending thats when things will become extremely precarious. Will the govt default or print zimbabwe style? Either way things will not be good for the dollar at that point.
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