Sunday, November 30, 2008
Saturday, November 29, 2008
HEROIC ATTEMPTS TO REFLATE THE BUBBLE
http://research.stlouisfed.org/publications/usfd/page3.pdf
CLoseup of what I recently posted.
Here is more charts and discussion ontopic at Ludwig Von Mises
http://mises.org/Community/forums/t/3992.aspx
With all this why isnt VELOCITY of money growing?
D
CLoseup of what I recently posted.
Here is more charts and discussion ontopic at Ludwig Von Mises
http://mises.org/Community/forums/t/3992.aspx
With all this why isnt VELOCITY of money growing?
D
FLY IN BULLISH ONITMENT?
One-Month Dollar Libor at Three-Week High on Year-End Concern
By Kim-Mai Cutler and Candice Zachariahs
Nov. 28 (Bloomberg) -- The cost of borrowing in dollars for one month stayed at the highest level in three weeks as banks sought funding to bolster balance sheets through year-end amid a global squeeze on credit.
The London interbank offered rate, or Libor, that banks say they charge one another for such loans was unchanged at 1.90 percent today, British Bankers’ Association data showed. The rate rose the most in nine years yesterday. The overnight Libor climbed above the Federal Reserve’s target rate for the first time in almost a month, to 1.16 percent. The Libor-OIS spread, a measure of the willingness of banks to lend, also widened.
“One-month rates are the most sensitive at the moment,” said Sean Maloney, a fixed-income strategist in London at Nomura International Plc. “We are getting to month-end so the rate will cover the turn into 2009 and there’s very limited liquidity in the market.”
With a month to go until the end of 2008, banks are vying for loans that mature after Dec. 31 to strengthen their balance sheets as they prepare to report to investors. Financial institutions mark the value of loans and cash positions at the end of each quarter. The one-month Libor climbed 47 basis points yesterday, the most since 1999.
Banks are hoarding cash on concern interest-rate cuts and government spending plans will fail to avert the worst global slump since World War II. China’s economic deterioration is quickening as the financial crisis spreads, the nation’s top planner said yesterday.
Squeeze in Lending
Credit markets, which began seizing up after BNP Paribas SA halted withdrawals on three funds in August 2007, froze after Lehman Brothers Holdings Inc. collapsed on Sept. 15. Financial institutions posted almost $1 trillion of writedowns and credit losses since the start of 2007.
The Libor-OIS spread, a gauge of cash scarcity among banks favored by former Fed Chairman Alan Greenspan, widened four basis points to 182 basis points. The difference between what banks and the Treasury pay to borrow money for three months, known as the TED spread, rose two basis points to 218 basis points. The spread, which reached a low this year of 76 basis points in May, was at 464 basis points on Oct. 10, the most since Bloomberg began compiling the data in 1984.
“OIS-Libor spreads remain wide,” said Guillaume Baron, a fixed-income strategist at Societe Generale SA in Paris. “We have seen some improvement in conditions for euros, but not in dollars. We can’t explain why. The market’s crazy.”
ECB Deposits
The one-month euro interbank offered rate, or Euribor, that banks say they charge each other declined 4 basis points to 3.57 percent today, according to the European Banking Federation. It jumped 22 basis points yesterday, the most in a year. The three- month rate fell to the lowest level in 21 months, to 3.85 percent, the EBF said.
In a further indication of the squeeze in lending, the European Central Bank registered almost 205 billion euros ($263 billion) of cash deposited by banks yesterday in its overnight facility. It was the seventh straight day the figure surpassed 200 billion euros. The daily average in the first eight months of the year was 427 million euros.
Interest rates on U.S. commercial paper, or CP, rose to the highest level in more than three weeks, according to data compiled by Bloomberg. Rates on the highest-ranked 30-day CP climbed 25 basis points to 1.52 percent, or 52 basis points more than the Fed’s target rate, according to yields offered by companies and compiled by Bloomberg. CP, which matures in 270 days or less, is used by companies to finance daily expenses such as payroll and rent.
‘Trust Not Addressed’
Rates in Asia increased today. Singapore‘s interbank three- month offered rate for U.S. dollar loans, or Sibor, rose two basis points to 2.22 percent, capping the first weekly advance since Oct. 10. Australia’s three-month rate rose 16 basis points to 4.72 percent. South Korea’s one-year cross-currency swap was below zero for a sixth day, showing the nation’s banks are starved of U.S. currency.
“The provision of liquidity is only part of the problem, with solvency and trust still to be fully addressed,” Brian Verlaan, global head of fixed-income research in Singapore at Standard Chartered Plc, said in a note to clients today. “It is the latter that will take longest to mend, with liquidity continuing to be hoarded and interbank-lending activity confined to just the shortest tenors.”
Japan’s three-month rate jumped 3.7 basis points this week to 0.876 percent, the biggest gain since February 2007. A basis point is 0.01 percentage point.
Hong Kong‘s three-month interbank rate, Hibor, fell 4.5 basis points to 1.951 percent, paring its first weekly increase this month.
Libor, the benchmark for $360 trillion of financial products worldwide, is set by a panel of banks in a daily survey by the BBA before noon in London. Members give estimates for how much they would charge for loans ranging from one day to a year in currencies including the dollar, euro, yen and pound. Euribor is set about two hours earlier in a survey by the European Banking Federation. EBF members only give estimates for the cost of borrowing euros.
By Kim-Mai Cutler and Candice Zachariahs
Nov. 28 (Bloomberg) -- The cost of borrowing in dollars for one month stayed at the highest level in three weeks as banks sought funding to bolster balance sheets through year-end amid a global squeeze on credit.
The London interbank offered rate, or Libor, that banks say they charge one another for such loans was unchanged at 1.90 percent today, British Bankers’ Association data showed. The rate rose the most in nine years yesterday. The overnight Libor climbed above the Federal Reserve’s target rate for the first time in almost a month, to 1.16 percent. The Libor-OIS spread, a measure of the willingness of banks to lend, also widened.
“One-month rates are the most sensitive at the moment,” said Sean Maloney, a fixed-income strategist in London at Nomura International Plc. “We are getting to month-end so the rate will cover the turn into 2009 and there’s very limited liquidity in the market.”
With a month to go until the end of 2008, banks are vying for loans that mature after Dec. 31 to strengthen their balance sheets as they prepare to report to investors. Financial institutions mark the value of loans and cash positions at the end of each quarter. The one-month Libor climbed 47 basis points yesterday, the most since 1999.
Banks are hoarding cash on concern interest-rate cuts and government spending plans will fail to avert the worst global slump since World War II. China’s economic deterioration is quickening as the financial crisis spreads, the nation’s top planner said yesterday.
Squeeze in Lending
Credit markets, which began seizing up after BNP Paribas SA halted withdrawals on three funds in August 2007, froze after Lehman Brothers Holdings Inc. collapsed on Sept. 15. Financial institutions posted almost $1 trillion of writedowns and credit losses since the start of 2007.
The Libor-OIS spread, a gauge of cash scarcity among banks favored by former Fed Chairman Alan Greenspan, widened four basis points to 182 basis points. The difference between what banks and the Treasury pay to borrow money for three months, known as the TED spread, rose two basis points to 218 basis points. The spread, which reached a low this year of 76 basis points in May, was at 464 basis points on Oct. 10, the most since Bloomberg began compiling the data in 1984.
“OIS-Libor spreads remain wide,” said Guillaume Baron, a fixed-income strategist at Societe Generale SA in Paris. “We have seen some improvement in conditions for euros, but not in dollars. We can’t explain why. The market’s crazy.”
ECB Deposits
The one-month euro interbank offered rate, or Euribor, that banks say they charge each other declined 4 basis points to 3.57 percent today, according to the European Banking Federation. It jumped 22 basis points yesterday, the most in a year. The three- month rate fell to the lowest level in 21 months, to 3.85 percent, the EBF said.
In a further indication of the squeeze in lending, the European Central Bank registered almost 205 billion euros ($263 billion) of cash deposited by banks yesterday in its overnight facility. It was the seventh straight day the figure surpassed 200 billion euros. The daily average in the first eight months of the year was 427 million euros.
Interest rates on U.S. commercial paper, or CP, rose to the highest level in more than three weeks, according to data compiled by Bloomberg. Rates on the highest-ranked 30-day CP climbed 25 basis points to 1.52 percent, or 52 basis points more than the Fed’s target rate, according to yields offered by companies and compiled by Bloomberg. CP, which matures in 270 days or less, is used by companies to finance daily expenses such as payroll and rent.
‘Trust Not Addressed’
Rates in Asia increased today. Singapore‘s interbank three- month offered rate for U.S. dollar loans, or Sibor, rose two basis points to 2.22 percent, capping the first weekly advance since Oct. 10. Australia’s three-month rate rose 16 basis points to 4.72 percent. South Korea’s one-year cross-currency swap was below zero for a sixth day, showing the nation’s banks are starved of U.S. currency.
“The provision of liquidity is only part of the problem, with solvency and trust still to be fully addressed,” Brian Verlaan, global head of fixed-income research in Singapore at Standard Chartered Plc, said in a note to clients today. “It is the latter that will take longest to mend, with liquidity continuing to be hoarded and interbank-lending activity confined to just the shortest tenors.”
Japan’s three-month rate jumped 3.7 basis points this week to 0.876 percent, the biggest gain since February 2007. A basis point is 0.01 percentage point.
Hong Kong‘s three-month interbank rate, Hibor, fell 4.5 basis points to 1.951 percent, paring its first weekly increase this month.
Libor, the benchmark for $360 trillion of financial products worldwide, is set by a panel of banks in a daily survey by the BBA before noon in London. Members give estimates for how much they would charge for loans ranging from one day to a year in currencies including the dollar, euro, yen and pound. Euribor is set about two hours earlier in a survey by the European Banking Federation. EBF members only give estimates for the cost of borrowing euros.
Friday, November 28, 2008
CONSUMER RECOVERY?
* One clue would be to see this chart break out of its downward channel which began near the beginning of SEPT masacre.
DOW CHART
Each day of rally has brought less and less volume, we are in a ZONE I was expecting a rally to enter, potentialy fnishing a Head And SHoulders pattern.
I have added VIX to be on guard for a REAL change in trader behavior
D
BALTIC DRY INDEX STILL IN FREEFALL
Baltic Dry Index - BDI
A shipping and trade index created by the London-based Baltic Exchange that measures changes in the cost to transport raw materials such as metals, grains and fossil fuels by sea.
The Baltic Exchange directly contacts shipping brokers to assess price levels for a given route, product to transport and time to delivery (speed). The Baltic Dry Index is a composite of three sub-indexes that measure different sizes of dry bulk carriers (merchant ships) - Capesize, Supramax and Panamax. Multiple geographic routes are evaluated for each index to give depth to the index's composite measurement.It is also known as the "Dry Bulk Index".
Changes in the Baltic Dry Index can give investors insight into global supply and demand trends. This change is often considered a leading indicator of future economic growth (if the index is rising) or contraction (index is falling) because the goods shipped are raw, pre-production material, which is typically an area with very low levels of speculation. Because the supply of large carriers tends to remain very tight, with long lead times and high production costs, the index can experience high levels of volatility if global demand increases or drops off suddenly.
The Baltic Exchange also operates as a maker of markets in freight derivatives, a type of forward contract known as FFAs (forward freight agreements) that are traded over-the-counter.
**What is the GLOBAL demand trend?
D
JAPAN STILL STRUGGLING WITH DEFLATION?
Japan industry: 'Unprecedented' decline
Country's industrial production plummets as slowing world economy weighs on exports.
November 28, 2008: 6:31 AM ET
TOKYO (AP) -- Production at Japan's vital manufacturers is sinking fast - and is projected to turn in its worst quarter ever - amid a plunge in global demand that is battering the core of the world's second-largest economy.
The government said Friday that industrial production in October fell a sharp 3.1% from the previous month and is expected to decline precipitously in the months ahead. The result follows a 1.1% gain in September and undershot market expectations for a 2.5% contraction.
"The world economy is a disaster," said Richard Jerram, chief economist at Macquarie Securities in Tokyo. "Exports are in the process of collapsing, and as a result industrial production is falling at unprecedented speed."
The results, along with labor and spending data released separately, underscore the increasingly grim outlook for Japan as it grapples with recession and the perils of depending so heavily on overseas sales of its cars and gadgets.
Exports in October marked their biggest decline in seven years, and companies expect conditions to only get worse.
Factory output will likely plummet 6.4% in November and fall 2.9% in December, according to the Ministry of Economy, Trade and Industry.
At that rate, industrial production is on track for its biggest quarterly fall since the government began compiling the data in 1955, said Masamichi Adachi, senior economist at JP Morgan Securities in Tokyo.
Adding to the pain is a stronger yen, forcing a growing number of exporters big and small to slash their future expectations for profit, sales and spending.
Electronics giant Panasonic Corp (PC). on Thursday became the latest victim of the global whiplash. It revised down its annual profit forecast by 90%, blaming a strong yen, sluggish sales and heavy discounting.
Earlier, Toyota Motor Corp. (TM) reduced its net profit full-year profit forecast to $5.5 billion - about a third of last year's earnings.
October's dismal production figures stem largely from heavy production cutbacks in among auto companies, electronics firms and machinery makers.
Production of transport equipment fell 5.8% during the month, while that of general machinery declined 3.5%. Electrical machinery output was down 1.7%, and electronic parts and device production slid 8.9%.
The government released other troubling data Friday.
Japan's unemployment rate stood at 3.7% in October, down from 4% the previous month.
The figure, however, is misleading, because it does not reflect the growing numbers of those choosing to leave the labor market entirely instead of looking for work, said Goldman Sachs economist Chiwoong Lee in a report.
"In the current situation we focus on the number of employed, which has declined for nine months in a row," Lee said. "This says the labor market is deteriorating."
After the data's release, Finance Minister Shoichi Nakagawa urged the Bank of Japan to take more steps to bolster Japan's labor market, without specifying any proposals.
"Looking ahead, Japan's economy is expected to face further deterioration, especially in income and employment," Nakagawa said, according to Kyodo news agency. "If the BOJ shares such a recognition, I would like the bank to carry out necessary steps."
Also, average monthly household spending in October fell a worse-than-expected 3.8% from a year earlier. The figure is an important gauge for individual spending, which accounts for more than half of Japan's gross domestic product.
Retail sales fell 0.6% from a year earlier in the second straight month of decline.
Prices continued to climb in October, though at a slower pace than earlier this year as oil prices eased. Japan's core consumer price index, excluding often volatile fresh food prices, rose 1.9%, climbing for the 13th straight month.
Lower prices should help stabilize domestic demand and offer some support to domestic companies' profits, Macquarie's Jerram said.
"The real disaster is on the export side of the economy," he said. "The domestic economy is not in great shape, but it's nothing like the catastrophe that you can see in export-facing industries."
Country's industrial production plummets as slowing world economy weighs on exports.
November 28, 2008: 6:31 AM ET
TOKYO (AP) -- Production at Japan's vital manufacturers is sinking fast - and is projected to turn in its worst quarter ever - amid a plunge in global demand that is battering the core of the world's second-largest economy.
The government said Friday that industrial production in October fell a sharp 3.1% from the previous month and is expected to decline precipitously in the months ahead. The result follows a 1.1% gain in September and undershot market expectations for a 2.5% contraction.
"The world economy is a disaster," said Richard Jerram, chief economist at Macquarie Securities in Tokyo. "Exports are in the process of collapsing, and as a result industrial production is falling at unprecedented speed."
The results, along with labor and spending data released separately, underscore the increasingly grim outlook for Japan as it grapples with recession and the perils of depending so heavily on overseas sales of its cars and gadgets.
Exports in October marked their biggest decline in seven years, and companies expect conditions to only get worse.
Factory output will likely plummet 6.4% in November and fall 2.9% in December, according to the Ministry of Economy, Trade and Industry.
At that rate, industrial production is on track for its biggest quarterly fall since the government began compiling the data in 1955, said Masamichi Adachi, senior economist at JP Morgan Securities in Tokyo.
Adding to the pain is a stronger yen, forcing a growing number of exporters big and small to slash their future expectations for profit, sales and spending.
Electronics giant Panasonic Corp (PC). on Thursday became the latest victim of the global whiplash. It revised down its annual profit forecast by 90%, blaming a strong yen, sluggish sales and heavy discounting.
Earlier, Toyota Motor Corp. (TM) reduced its net profit full-year profit forecast to $5.5 billion - about a third of last year's earnings.
October's dismal production figures stem largely from heavy production cutbacks in among auto companies, electronics firms and machinery makers.
Production of transport equipment fell 5.8% during the month, while that of general machinery declined 3.5%. Electrical machinery output was down 1.7%, and electronic parts and device production slid 8.9%.
The government released other troubling data Friday.
Japan's unemployment rate stood at 3.7% in October, down from 4% the previous month.
The figure, however, is misleading, because it does not reflect the growing numbers of those choosing to leave the labor market entirely instead of looking for work, said Goldman Sachs economist Chiwoong Lee in a report.
"In the current situation we focus on the number of employed, which has declined for nine months in a row," Lee said. "This says the labor market is deteriorating."
After the data's release, Finance Minister Shoichi Nakagawa urged the Bank of Japan to take more steps to bolster Japan's labor market, without specifying any proposals.
"Looking ahead, Japan's economy is expected to face further deterioration, especially in income and employment," Nakagawa said, according to Kyodo news agency. "If the BOJ shares such a recognition, I would like the bank to carry out necessary steps."
Also, average monthly household spending in October fell a worse-than-expected 3.8% from a year earlier. The figure is an important gauge for individual spending, which accounts for more than half of Japan's gross domestic product.
Retail sales fell 0.6% from a year earlier in the second straight month of decline.
Prices continued to climb in October, though at a slower pace than earlier this year as oil prices eased. Japan's core consumer price index, excluding often volatile fresh food prices, rose 1.9%, climbing for the 13th straight month.
Lower prices should help stabilize domestic demand and offer some support to domestic companies' profits, Macquarie's Jerram said.
"The real disaster is on the export side of the economy," he said. "The domestic economy is not in great shape, but it's nothing like the catastrophe that you can see in export-facing industries."
Thursday, November 27, 2008
AN ATTEMPT TO REWRITE HISTORY
S &P earnings especially 2009 estimates ($90 !!!???)
great read every month! http://www.contraryinvestor.com/mo.htm
and where we ended the 2003 Bear Mkt ($40 SPX earnings and a PE of 35 !!! DIV yield of 2%) and add in chart of where TOTAL credit mkt debt as % of GDP (now 350% !!!) a BELL rang in my head and gives me the clearest picture I can hope to have as to what 2009 could be and what the stock market might reflect.
If we are indeed in a PROLONGED period of CREDIT CONTRACTION as one might expect we are indeed in, to my understanding you just don't STOP this and TURN ON A DIME. If case even remotely similar to 1930's correction back to the mean.......I don't need to spell that out....a generational shift?
Is there an ESCAPE from Kondratief WInter? Is near DOUBLING of existing fiat currency (if even just held by the treasury as deposits and not loaned out) in a matter of just a few months going to turn this deflation train around and again FORSTALL DAY OF RECKONING? and the eventual TRIP BACK TO THE MEAN?
With hit to Consumer Discretionary Spending, collpase of Energy Company and FInancial company profits coming to the 2009 SPX 500 profits, what are the chances this "pull out all the stops" efforts will avert what history says must repeat?
Is current situation more damaging than previous Bear correction? 2000 Profits were around $35 for SPX per CI chart, a collapse in stock prices and the effect of monetary policy saw the trough at $35 SPX earnings, PE ratio 35 and in 2006 saw SPX reach near $90 earnings and PE contracted to near 15.......we got their by GOOSING on STEROIDS bank and Real Estate related profits as we built historic bubble. EN MASSE Americans pulled maybe $Trillions out of their home equity and SPENT, UPGRADED, IMPROVED, CONSUMED our way to the height of 2007 prosperity.
WILL proposed historic GOV spending stimulus plan revive the economy? If so by next year it would again PUT OFF NEEDED recovery from historic malinvestments.
If doubling the monetary base and all the stim is ineffective, what then?
WED the BDI ended at lowest level for this move extending its IMPLOSION, off over 95% from highs at start of 2008, the BDI does not show a coming recovery of any kind and it should start here, the shipping of the raw materials to make things.
BEAR MKTS have ended with single digit PE ratios and DIV yields OVER 6%........where are we now? OVER 17 !!
Regardless, it is the abandonment of dividends for capital gains to finance our retirements that has resulted in a bubble. And even in using the dividend yield (dividends divided by price), the picture painted is much worse. Stocks, even with the crash in the past two weeks are still overvalued based on the only thing that matters; dividends. We're still not even close to the historical average dividend yield of 5%. Ergo, why buy stocks now? http://captaincapitalism.blogspot.com/2008/10/s-500-dividend-yield.html
great read every month! http://www.contraryinvestor.com/mo.htm
and where we ended the 2003 Bear Mkt ($40 SPX earnings and a PE of 35 !!! DIV yield of 2%) and add in chart of where TOTAL credit mkt debt as % of GDP (now 350% !!!) a BELL rang in my head and gives me the clearest picture I can hope to have as to what 2009 could be and what the stock market might reflect.
If we are indeed in a PROLONGED period of CREDIT CONTRACTION as one might expect we are indeed in, to my understanding you just don't STOP this and TURN ON A DIME. If case even remotely similar to 1930's correction back to the mean.......I don't need to spell that out....a generational shift?
Is there an ESCAPE from Kondratief WInter? Is near DOUBLING of existing fiat currency (if even just held by the treasury as deposits and not loaned out) in a matter of just a few months going to turn this deflation train around and again FORSTALL DAY OF RECKONING? and the eventual TRIP BACK TO THE MEAN?
With hit to Consumer Discretionary Spending, collpase of Energy Company and FInancial company profits coming to the 2009 SPX 500 profits, what are the chances this "pull out all the stops" efforts will avert what history says must repeat?
Is current situation more damaging than previous Bear correction? 2000 Profits were around $35 for SPX per CI chart, a collapse in stock prices and the effect of monetary policy saw the trough at $35 SPX earnings, PE ratio 35 and in 2006 saw SPX reach near $90 earnings and PE contracted to near 15.......we got their by GOOSING on STEROIDS bank and Real Estate related profits as we built historic bubble. EN MASSE Americans pulled maybe $Trillions out of their home equity and SPENT, UPGRADED, IMPROVED, CONSUMED our way to the height of 2007 prosperity.
WILL proposed historic GOV spending stimulus plan revive the economy? If so by next year it would again PUT OFF NEEDED recovery from historic malinvestments.
If doubling the monetary base and all the stim is ineffective, what then?
WED the BDI ended at lowest level for this move extending its IMPLOSION, off over 95% from highs at start of 2008, the BDI does not show a coming recovery of any kind and it should start here, the shipping of the raw materials to make things.
BEAR MKTS have ended with single digit PE ratios and DIV yields OVER 6%........where are we now? OVER 17 !!
Regardless, it is the abandonment of dividends for capital gains to finance our retirements that has resulted in a bubble. And even in using the dividend yield (dividends divided by price), the picture painted is much worse. Stocks, even with the crash in the past two weeks are still overvalued based on the only thing that matters; dividends. We're still not even close to the historical average dividend yield of 5%. Ergo, why buy stocks now? http://captaincapitalism.blogspot.com/2008/10/s-500-dividend-yield.html
Wednesday, November 26, 2008
TROUBLESOME
This is a NEW LOW for the BDI since I have been following it, and this can't be good news....a worsening bulk container ship day rate already down over 95%......what gets shipped here is RAW MATERIALS which get made into THINGS.
Dramatic drop in durable goods orders this AM......many keep asking "is this the bottom"
Many think another BILLIONAIRE is smarter than the market and buys more C shares, SLIM SHADY from MEHEEECOOOO.
When the last BILLIONAIRE weighs in maybe we get out bottom.
From above chart is BDI leading gold or....
D
Tuesday, November 25, 2008
RON SMITH SPEAKS OUT VOICE OF REASON
Debt and More Debt, That's the AnswerTuesday, November 25, 2008 - Ron Smith
The word “stimulus” has never been more in vogue than it is now. All the highly educated economists selected by the incoming president to take charge of the government’s battle against economic meltdown are said to be in agreement that no matter what, countless billions of additional dollars must be deployed as a “stimulus” to the imploding economy. The mind reels as it contemplates how in the world more of what caused the problem in the first place can possibly cure it. Ron Paul described the strategy as trying to cure an ill patient by giving him poison.
For all their bally-hooed brilliance, the Obama economic team – Tim Geithner, Larry Summers, Christina Romer and Melody Barnes – are products of universities where they were taught Keynesian economics. As a result, they believe that the market correction of the problems caused by Federal Reserve-created credit is the problem itself. This misdiagnosis leads to precisely the wrong treatment for the malady, the printing of more dollars. Richard Maybury says, ‘They are rather like the drug addict who thinks withdrawals are his problem, so he keeps shooting up in order to avoid them.”
Every day we hear about the need to get the consumers spending again, which means borrowing like they used to. But people don’t want to borrow now and lenders don’t want lend now, because the confidence, the “irrational exuberance” that made the markets soar has turned into fear about the future. The mania (greed) has morphed as it always does when markets crash, into fear. The Fed has been inflating the money supply since its creation in 1913. The brute fact is that the private banking cartel, whose ostensible purpose was to protect the value of the dollar, has instead presided over its destruction. The 1913-dollar has been reduced to four cents today.
Federal debt is now rising in a hockey stick curve, accelerating past $10 trillion dollars and racing toward infinity. Your individual share is in the neighborhood of $35,000. That’s what you owe our creditors now. Check it out. Then tell me how creating even more debt, flooding the economy with more dollars is going to turn things around. The Keynesians are without a clue. The Austrians are without influence. The likely result of what our leaders are doing in response to the crisis is the eventual destruction of the dollar after a period, however long no one knows, in which cash will be king.
In the end, inflation will almost assuredly overtake the massive ongoing asset deflation, which has seen the loss of at least $30 trillion in stocks and real estate valuations in just the last few months. When will the remaining four cents of that 1913-dollar disappear, and what happens then? It’s beyond imagining for most of us and that’s probably just as well.
WBAL Radio Baltimore
http://wbal.com/
The word “stimulus” has never been more in vogue than it is now. All the highly educated economists selected by the incoming president to take charge of the government’s battle against economic meltdown are said to be in agreement that no matter what, countless billions of additional dollars must be deployed as a “stimulus” to the imploding economy. The mind reels as it contemplates how in the world more of what caused the problem in the first place can possibly cure it. Ron Paul described the strategy as trying to cure an ill patient by giving him poison.
For all their bally-hooed brilliance, the Obama economic team – Tim Geithner, Larry Summers, Christina Romer and Melody Barnes – are products of universities where they were taught Keynesian economics. As a result, they believe that the market correction of the problems caused by Federal Reserve-created credit is the problem itself. This misdiagnosis leads to precisely the wrong treatment for the malady, the printing of more dollars. Richard Maybury says, ‘They are rather like the drug addict who thinks withdrawals are his problem, so he keeps shooting up in order to avoid them.”
Every day we hear about the need to get the consumers spending again, which means borrowing like they used to. But people don’t want to borrow now and lenders don’t want lend now, because the confidence, the “irrational exuberance” that made the markets soar has turned into fear about the future. The mania (greed) has morphed as it always does when markets crash, into fear. The Fed has been inflating the money supply since its creation in 1913. The brute fact is that the private banking cartel, whose ostensible purpose was to protect the value of the dollar, has instead presided over its destruction. The 1913-dollar has been reduced to four cents today.
Federal debt is now rising in a hockey stick curve, accelerating past $10 trillion dollars and racing toward infinity. Your individual share is in the neighborhood of $35,000. That’s what you owe our creditors now. Check it out. Then tell me how creating even more debt, flooding the economy with more dollars is going to turn things around. The Keynesians are without a clue. The Austrians are without influence. The likely result of what our leaders are doing in response to the crisis is the eventual destruction of the dollar after a period, however long no one knows, in which cash will be king.
In the end, inflation will almost assuredly overtake the massive ongoing asset deflation, which has seen the loss of at least $30 trillion in stocks and real estate valuations in just the last few months. When will the remaining four cents of that 1913-dollar disappear, and what happens then? It’s beyond imagining for most of us and that’s probably just as well.
WBAL Radio Baltimore
http://wbal.com/
"MONSTER LURKING IN BOND MARKET
http://www.cnbc.com/id/15840232?video=938964876&play=1
Monster Lurking in the Bond Market
"The monster is still coming closer and I've just about run out of ways of protecting myself," Nicole Elliott from Mizuho Corporate Bank told CNBC while taking a technical look at US and Japanese bonds.
** Friends, readers from around the globe, I couldn't make this stuff up.....are we faced in this country with one of only 2 choices? WEIMAR REPUBLIC or DEPRESSION?
I am not alarmist, nor rosey optimist, but a practical guy, I rather be happy...singing a tune....eating a kit kat bar...strumming my bass without a care. But I run a business, my sales have shrunk to 1990 levels but i have 2008 expenses, health care, rent, insurance. I have manufacturers still raising prices.....even as their sales flag...trying to make up lost ground.
Well it can't be done. You can't force people to borrow, you can't force banks to lend.....you cannot reinflate the credit monster bubble of all times no matter how much you throw at it.
Imbalances have to correct at some point and the time is now.
10 yr yields at 3% and 3 month yields at 0% this is the stuff of DEFLATION MY FRIENDS....the way the printing presses are going night and day.....NEVER BEFORE and it has not turned this thing around!
YR/YR existing home prices collapsed last month......I have to ask you....how did Obama arrive at creating 2.5 Million jobs?
If furniture is not bought, cars sold, financial houses in RUIN, multitudes of corporations DESPERATE to fund debt....GE took 10% money! how so we print up 2.5 M jobs?
"No place to run and hide"
D
Monster Lurking in the Bond Market
"The monster is still coming closer and I've just about run out of ways of protecting myself," Nicole Elliott from Mizuho Corporate Bank told CNBC while taking a technical look at US and Japanese bonds.
** Friends, readers from around the globe, I couldn't make this stuff up.....are we faced in this country with one of only 2 choices? WEIMAR REPUBLIC or DEPRESSION?
I am not alarmist, nor rosey optimist, but a practical guy, I rather be happy...singing a tune....eating a kit kat bar...strumming my bass without a care. But I run a business, my sales have shrunk to 1990 levels but i have 2008 expenses, health care, rent, insurance. I have manufacturers still raising prices.....even as their sales flag...trying to make up lost ground.
Well it can't be done. You can't force people to borrow, you can't force banks to lend.....you cannot reinflate the credit monster bubble of all times no matter how much you throw at it.
Imbalances have to correct at some point and the time is now.
10 yr yields at 3% and 3 month yields at 0% this is the stuff of DEFLATION MY FRIENDS....the way the printing presses are going night and day.....NEVER BEFORE and it has not turned this thing around!
YR/YR existing home prices collapsed last month......I have to ask you....how did Obama arrive at creating 2.5 Million jobs?
If furniture is not bought, cars sold, financial houses in RUIN, multitudes of corporations DESPERATE to fund debt....GE took 10% money! how so we print up 2.5 M jobs?
"No place to run and hide"
D
"BACK TO BAD OLD DAYS"
http://londonbanker.blogspot.com/2008/11/systemic-risk-contagion-and-trade.html
London Banker has been a central banker and securities markets regulator during a varied and interesting career in global financial markets.
Great read thanks P
Duratek
London Banker has been a central banker and securities markets regulator during a varied and interesting career in global financial markets.
Great read thanks P
Duratek
BAILOUT SURGE by RON PAUL Straight Talk
November 24, 2008
The Bailout Surge
by Ron Paul
This week the bailout of the Big Three automakers was under heavy consideration in Congress's lame duck session. I have always opposed government bailouts of private organizations. Back in 1979 Congress had hearings about bailing out Chrysler and I was on record pointing out that these types of policies are foolish and very damaging to the long term economic health of our country. They still are.
There was also renewed pressure this week to bailout homeowners and send another round of stimulus checks to "Main Street" to balance out all the handouts to big business. It seems that eventually the entire economy is going to be blanketed over with Federal Reserve notes. Most in Washington are completely oblivious as to why this model of money creation and spending is so dangerous.
We must remember that governments do not produce anything. Their only resources come from producers in the economy through such means as inflation and taxation. The government has an obligation to be good stewards of these resources.
In bailing out failing companies, they are confiscating money from productive members of the economy and giving it to failing ones. By sustaining companies with obsolete or unsustainable business models, the government prevents their resources from being liquidated and made available to other companies that can put them to better, more productive use. An essential element of a healthy free market, is that both success and failure must be permitted to happen when they are earned. But instead with a bailout, the rewards are reversed - the proceeds from successful entities are given to failing ones. How this is supposed to be good for our economy is beyond me.
With each bailout we hear rhetoric that this is the mother of all bailouts. This will fix the problem once and for all, and that this is absolutely necessary to avert disaster. This sense of panic squeezes astonishing amounts of dollars out of reluctant but hopeful legislators, who hate the position they are being put in, but are relieved that it will be the last time. It is never the last time, and again and again we are faced with the same scenarios and the same fears.
We are already in the bailout business for such a staggering amount that admitting it was wrong in the first place would be too embarrassing. So the commitment to this course of action is only irrationally escalated, in the hopes that somehow, someway eventually it will work and those in power won't have to admit they were wrong.
It won't work. It can't work. We need to cut our losses and get back on course. There is too much at stake for too many people to continue down this road. The bailouts thus far to AIG, Bear Stearns, Fannie and Freddie, and TARP funds amount to around $1.5 trillion. Considering our GDP is $14 trillion, and our Federal budget is already $3 trillion, this additional amount will significantly eat into our future lifestyles. That amounts to an extra $5,000 that every person in the country needs to somehow produce just to keep up.
It is obvious to most Americans that we need to reject corporate cronyism, and allow the natural regulations and incentives of the free market to pick the winners and losers in our economy, not the whims of bureaucrats and politicians.
The Bailout Surge
by Ron Paul
This week the bailout of the Big Three automakers was under heavy consideration in Congress's lame duck session. I have always opposed government bailouts of private organizations. Back in 1979 Congress had hearings about bailing out Chrysler and I was on record pointing out that these types of policies are foolish and very damaging to the long term economic health of our country. They still are.
There was also renewed pressure this week to bailout homeowners and send another round of stimulus checks to "Main Street" to balance out all the handouts to big business. It seems that eventually the entire economy is going to be blanketed over with Federal Reserve notes. Most in Washington are completely oblivious as to why this model of money creation and spending is so dangerous.
We must remember that governments do not produce anything. Their only resources come from producers in the economy through such means as inflation and taxation. The government has an obligation to be good stewards of these resources.
In bailing out failing companies, they are confiscating money from productive members of the economy and giving it to failing ones. By sustaining companies with obsolete or unsustainable business models, the government prevents their resources from being liquidated and made available to other companies that can put them to better, more productive use. An essential element of a healthy free market, is that both success and failure must be permitted to happen when they are earned. But instead with a bailout, the rewards are reversed - the proceeds from successful entities are given to failing ones. How this is supposed to be good for our economy is beyond me.
With each bailout we hear rhetoric that this is the mother of all bailouts. This will fix the problem once and for all, and that this is absolutely necessary to avert disaster. This sense of panic squeezes astonishing amounts of dollars out of reluctant but hopeful legislators, who hate the position they are being put in, but are relieved that it will be the last time. It is never the last time, and again and again we are faced with the same scenarios and the same fears.
We are already in the bailout business for such a staggering amount that admitting it was wrong in the first place would be too embarrassing. So the commitment to this course of action is only irrationally escalated, in the hopes that somehow, someway eventually it will work and those in power won't have to admit they were wrong.
It won't work. It can't work. We need to cut our losses and get back on course. There is too much at stake for too many people to continue down this road. The bailouts thus far to AIG, Bear Stearns, Fannie and Freddie, and TARP funds amount to around $1.5 trillion. Considering our GDP is $14 trillion, and our Federal budget is already $3 trillion, this additional amount will significantly eat into our future lifestyles. That amounts to an extra $5,000 that every person in the country needs to somehow produce just to keep up.
It is obvious to most Americans that we need to reject corporate cronyism, and allow the natural regulations and incentives of the free market to pick the winners and losers in our economy, not the whims of bureaucrats and politicians.
COMMERCIAL REAL ESTATE AT RISK?
http://news.goldseek.com/GoldSeek/1227557473.php
OCT YR/YR home prices fell by 11% and this is a worsening from previous as sales or existing homes fell below expectation.
addt'l thoughts
I have feeling this 2 day BURST is NOT the real deal....until VIX is BROKEN Down any longs should be ninbble quickies....if you make a pt or 2 I would exit....like move in lots of shares yesterday.
We need to have a $1T stimulus bill yet we can CUT same out of budget? Something has spurred furn ind to cut 2009 sales by 10% (office)
I dont BUY the V bottom theory, lucky to get U,
GDP this AM futures ramping up ahead
2 500 pt days should act like 2 90% downers, should bring down to sideways next 5-7 days
If THIS MOVE for real, certainly now would be good time to test any S levels before moving on.
People showing up for foreclosure auctions but few bids and LOWER prices.
HOW much $$ destroyed? STIM package not going to SLOW DOWN layoffs and downward price spiral IMHO
D
OCT YR/YR home prices fell by 11% and this is a worsening from previous as sales or existing homes fell below expectation.
addt'l thoughts
I have feeling this 2 day BURST is NOT the real deal....until VIX is BROKEN Down any longs should be ninbble quickies....if you make a pt or 2 I would exit....like move in lots of shares yesterday.
We need to have a $1T stimulus bill yet we can CUT same out of budget? Something has spurred furn ind to cut 2009 sales by 10% (office)
I dont BUY the V bottom theory, lucky to get U,
GDP this AM futures ramping up ahead
2 500 pt days should act like 2 90% downers, should bring down to sideways next 5-7 days
If THIS MOVE for real, certainly now would be good time to test any S levels before moving on.
People showing up for foreclosure auctions but few bids and LOWER prices.
HOW much $$ destroyed? STIM package not going to SLOW DOWN layoffs and downward price spiral IMHO
D
Monday, November 24, 2008
DOW SOARS
90% up volume registered with todays advance, follow thru will tell us tons as to how far this rally can carry us.
9200-9500 is not out of the question. VIX dropped sharply, a fall below 40 ish would be one nail in bear coffin.
Stocks have looked cheap all the way down, how do you know when to jump in? 2 trips to VIX 80 should have been enough fear to give bear a pause....
I think we are seeing abear mkt rally, not end of bear or beginning of new bull, money can be made.
HNI jumped $1.50 today from $9 lows....I thought $9 was stupid price. SOLID company with caveat industry sales projected to fall 10% in 2009 ! IS IT already in stock?
ODP looks like a casualty under $2
WFMI whole foods up sharply finally rallying. SNDK popped off $5 price !!!
Not for the weak of knees, lots of risk, lots of potential, ST plays on long side.
NEED GOOD TEST of lows to get more jiggy as most will be deep in denial
D
9200-9500 is not out of the question. VIX dropped sharply, a fall below 40 ish would be one nail in bear coffin.
Stocks have looked cheap all the way down, how do you know when to jump in? 2 trips to VIX 80 should have been enough fear to give bear a pause....
I think we are seeing abear mkt rally, not end of bear or beginning of new bull, money can be made.
HNI jumped $1.50 today from $9 lows....I thought $9 was stupid price. SOLID company with caveat industry sales projected to fall 10% in 2009 ! IS IT already in stock?
ODP looks like a casualty under $2
WFMI whole foods up sharply finally rallying. SNDK popped off $5 price !!!
Not for the weak of knees, lots of risk, lots of potential, ST plays on long side.
NEED GOOD TEST of lows to get more jiggy as most will be deep in denial
D
Sunday, November 23, 2008
IGNORE STOCK MARKET UNTIL FEBRUARY
http://finance.yahoo.com/banking-budgeting/article/106201/Ignore-the-Stock-Market-Until-February Wall Street JOurnal
Thought I would dismiss this story as dribble, but reasons to SELL next 2 months may be accurate and keep sustainable rally at bey
D
Thought I would dismiss this story as dribble, but reasons to SELL next 2 months may be accurate and keep sustainable rally at bey
D
jbr HOW DOES CURENT SITUATION COMPARE TO GREAT DEPRESSION
http://www.fsmitha.com/h2/ch15wd.html Macro History Great Depression, a background
In his first one hundred days in office, Roosevelt was responding to crises more than he was laying plans for economic construction. First he ended the run on the banks, bringing a return of confidence in banking. In a "fireside chat" he told citizens that it was safer to put money in the bank than to keep it under one's mattress. He invoked the Trading with the Enemy Act of 1917 in order to suspend the export of gold and silver. By law, banks and individuals were now required to deliver their gold to Federal Reserve banks in return for currency. Then his advisors talked him into attempting to stimulate the economy by increasing the money supply. This included putting three billion more dollars into circulation and taking the dollar off the gold standard.
During these first one hundred days, Roosevelt decided to help the distressed farmers. Hoover had tried to help farmers by buying their surpluses, which had encouraged over-production and resulted in ruinous low prices for farmers. Instead of this and letting bankruptcies run their course, Roosevelt chose to limit the production of certain crops and to give relief to farmers who were in immediate danger of losing their homes.
http://www.consumerwarningnetwork.com/2008/10/31/todays-economy-the-depression-is-it-panic-time/
One problem with above article is, the damage done from current situation is not over. I agree our morass may take 2nd place in stats of human tradegy, but in historical market stats we are setting some records.
HYPERINfLATION?
http://www.shadowstats.com/article/292
Our small businesses and incubator venture capital layer of new biz has all but been snuffed out, access to credit is needed to fuel the businesses of the future and create new jobs. Where have all the IPO's gone?
D
In his first one hundred days in office, Roosevelt was responding to crises more than he was laying plans for economic construction. First he ended the run on the banks, bringing a return of confidence in banking. In a "fireside chat" he told citizens that it was safer to put money in the bank than to keep it under one's mattress. He invoked the Trading with the Enemy Act of 1917 in order to suspend the export of gold and silver. By law, banks and individuals were now required to deliver their gold to Federal Reserve banks in return for currency. Then his advisors talked him into attempting to stimulate the economy by increasing the money supply. This included putting three billion more dollars into circulation and taking the dollar off the gold standard.
During these first one hundred days, Roosevelt decided to help the distressed farmers. Hoover had tried to help farmers by buying their surpluses, which had encouraged over-production and resulted in ruinous low prices for farmers. Instead of this and letting bankruptcies run their course, Roosevelt chose to limit the production of certain crops and to give relief to farmers who were in immediate danger of losing their homes.
http://www.consumerwarningnetwork.com/2008/10/31/todays-economy-the-depression-is-it-panic-time/
One problem with above article is, the damage done from current situation is not over. I agree our morass may take 2nd place in stats of human tradegy, but in historical market stats we are setting some records.
HYPERINfLATION?
http://www.shadowstats.com/article/292
Our small businesses and incubator venture capital layer of new biz has all but been snuffed out, access to credit is needed to fuel the businesses of the future and create new jobs. Where have all the IPO's gone?
D
Saturday, November 22, 2008
Favorite NEw Release
Mike Gordon:The Green Sparrow, Released 08/05/2008
An artist known for his endless creativity and touring stamina, Mike Gordon took 2007 off from touring and dedicated his time to writing his new album, The Green Sparrow. The end result is an eclectic record boasting the former Phish bassist's skillful assimilation of free-form rock & roll, calypso, pop and funk that also showcases an unexpected side to his songwriting. The Green Sparrow features Gordon's wide range of influences on a winning 10-track album that reminds us that he is one of the most imaginative and mold-breaking artists in music today. Recorded at Mike's home studio in Vermont and mixed at The Barn (his former band's studio and art space) The Green Sparrow features guest appearances from Gordon's Phish band mates Trey Anastasio and Page McConnell, Bill Kreutzmann (Grateful Dead), Chuck Leavell (Rolling Stones), Ivan Neville and horn players from Antibalas.
Thursday, November 20, 2008
CRASH ALERT IMPORTANT MARKET UPDATE
Some of you who have been loyal readers know about my BBI, BearMarket Bottom Indicator, I have not updated in awhile. I am relying on the monthly chart and we ended today at 9.31, this is lowest level I can back test.
The chart (proprietary) is astonishing, the plummet to this level crashlike, but until it turns up and I get additional data I do not want to imply this low reading will be the low reading or guess when it turns up. The weekly MA did, but then turned down again, so I am sticking with the monthly less subject to any whipsawing.
You could argue that at these levels DOWN THE ROAD you will make money as the market trend OVER TIME is up, but as I have tried to show over long secular bear markets (which contain wild cyclical bulls) it is a destroyer of values, and returns can be meager at best.
Bottom like readings in different areas, like almost 0% on 3 mnth tbills, record VIX, put call ratios near extremes add to the consideration. But we have just broken on the close the OCT 2008 lows with a higher VIX, so we want to see fear dissapate, mistakes are make thinking a HIGH fear level is enough to call a bottom, we need to see the trend of rising fear ended.
Here is some data to chew
7506 low of day OCT 2008 lows broken
HISTORY LESSON
7532 Reaction low of 2002
7500 closing low sept/oct 2002 (+ or -)
7416 2003 reaction low
7197 2002 reaction low
http://stockcharts.com/h-sc/ui?s=$CYC:$CMR&p=W&yr=8&mn=6&dy=0&id=p74150163626&a=147023766 new low here for this bear
How do you tell that all the hedges and forced selling is over? lower prices bring additional MARGIN CALLS and more forced selling.
On long term dow chart I see some support near 7,000, then it's down to 6,000 IMHO
http://stockcharts.com/h-sc/ui?s=$INDU&p=M&st=1970-10-01&id=p42793130881&a=147023808
Current environment is NOT condusive to support for SPX 500 earnings and hence expanding PE ratios.
ADAM HAMILTON OF ZEAL on DIVIE YIELDS AND BOTTOMS
http://www.zealllc.com/2003/dividend.htm
As discussed in “Long Valuation Waves”, dividend yields in the last century averaged about 4.6% for the general US equity markets. In all the graphs in this essay 4.6% is marked as fair value. Unlike valuations based solely on earnings, like the venerable P/E ratio, there is an inverse relationship between general dividend yields and general stock-market over or undervaluation.
When stocks are cheap they have high dividend yields, they pay out a relatively high percentage of their share price each year to their owners in cash dividends. The cheap level is arbitrarily marked in these graphs at 6%. As you examine the graphs, carefully observe the white 48-month moving average (48mma) of the dividend yield as well as the blue raw dividend yield itself and you will note that stocks generally rally in future years after cheap dividend yields around 6% are witnessed.
Conversely, when stocks are expensive they have low dividend yields. Their share prices are bid up so high that their annual cash dividend payments to their owners become relatively small in comparison. In these graphs, we marked 3% as the arbitrary expensive level. Once again, as you digest the graphs below you will note that stocks usually enter secular bear markets or trade sideways for years after expensive dividend yields around 3% are witnessed.
The chart (proprietary) is astonishing, the plummet to this level crashlike, but until it turns up and I get additional data I do not want to imply this low reading will be the low reading or guess when it turns up. The weekly MA did, but then turned down again, so I am sticking with the monthly less subject to any whipsawing.
You could argue that at these levels DOWN THE ROAD you will make money as the market trend OVER TIME is up, but as I have tried to show over long secular bear markets (which contain wild cyclical bulls) it is a destroyer of values, and returns can be meager at best.
Bottom like readings in different areas, like almost 0% on 3 mnth tbills, record VIX, put call ratios near extremes add to the consideration. But we have just broken on the close the OCT 2008 lows with a higher VIX, so we want to see fear dissapate, mistakes are make thinking a HIGH fear level is enough to call a bottom, we need to see the trend of rising fear ended.
Here is some data to chew
7506 low of day OCT 2008 lows broken
HISTORY LESSON
7532 Reaction low of 2002
7500 closing low sept/oct 2002 (+ or -)
7416 2003 reaction low
7197 2002 reaction low
http://stockcharts.com/h-sc/ui?s=$CYC:$CMR&p=W&yr=8&mn=6&dy=0&id=p74150163626&a=147023766 new low here for this bear
How do you tell that all the hedges and forced selling is over? lower prices bring additional MARGIN CALLS and more forced selling.
On long term dow chart I see some support near 7,000, then it's down to 6,000 IMHO
http://stockcharts.com/h-sc/ui?s=$INDU&p=M&st=1970-10-01&id=p42793130881&a=147023808
Current environment is NOT condusive to support for SPX 500 earnings and hence expanding PE ratios.
ADAM HAMILTON OF ZEAL on DIVIE YIELDS AND BOTTOMS
http://www.zealllc.com/2003/dividend.htm
As discussed in “Long Valuation Waves”, dividend yields in the last century averaged about 4.6% for the general US equity markets. In all the graphs in this essay 4.6% is marked as fair value. Unlike valuations based solely on earnings, like the venerable P/E ratio, there is an inverse relationship between general dividend yields and general stock-market over or undervaluation.
When stocks are cheap they have high dividend yields, they pay out a relatively high percentage of their share price each year to their owners in cash dividends. The cheap level is arbitrarily marked in these graphs at 6%. As you examine the graphs, carefully observe the white 48-month moving average (48mma) of the dividend yield as well as the blue raw dividend yield itself and you will note that stocks generally rally in future years after cheap dividend yields around 6% are witnessed.
Conversely, when stocks are expensive they have low dividend yields. Their share prices are bid up so high that their annual cash dividend payments to their owners become relatively small in comparison. In these graphs, we marked 3% as the arbitrary expensive level. Once again, as you digest the graphs below you will note that stocks usually enter secular bear markets or trade sideways for years after expensive dividend yields around 3% are witnessed.
**Current SPX 500 yields near 3.57%
I cannot predict exactly WHERE the bottom will be, and those following me hopefully have sidestepped this destruction but we do have history as a guide and when paid 6% plus to hold a stock, IF dividend is not cut can make huge difference when considering risk.
With play money there surely do appear to be some stocks worth considering, but in a fast moving market, with fear staying at historic elevated levels, trying to pick a btotom comes with some risk.....
IMHO I think the 2002 reaction lows are possible, and have figured a break there to maybe 6,000. We could be VERY close, and it always matters how long your willing to hold, but at very least a LIST of gems uncovered by the bear is a start in your quest to pick up some pieces.....when ready if you have raised cash to be able to do so.
This environment as people lose jobs could get worse, but at some point the market will begin to discount the end game.
Duratek
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