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The Bullish Bear?
Submitted by Leo Kolivakis, publisher of Pension Pulse.
Bloomberg reports that Leuthold Sees S&P 500 Rising to 1,350 on ‘Psychology’:
Steve Leuthold, whose Leuthold Core Investment Fund has beaten 95 percent of its rivals in the past five years, said the Standard & Poor’s 500 Index will jump to 1,350 next year as the economy recovers from the worst contraction since the Great Depression.
The 71-year-old investor, who turned bullish after his Grizzly Short Fund returned 74 percent because of the equity market rout in 2008, predicts that the stock index will end 2009 at 1,200. He joins Byron Wien, hired as a strategist by Blackstone Group LP in August, in predicting that the S&P 500 will complete a 77 percent surge from its March low on Dec. 31.
“There’s pretty good momentum, and the market psychology is right,” Leuthold, who manages $4 billion, said in a telephone interview from Minneapolis yesterday. “The markets turned up before the economy did. Now, the economy is improving. It might be a little better than most think. It ain’t wonderful, but it’s a lot better than it was.”
While the U.S. gross domestic product shrank for the fourth straight quarter during the April-to-June period, the Economic Cycle Research Institute’s gauge of growth surged 25 percent in the week ended Sept. 25, the fastest increase in data stretching back to 1968. It has risen every week since the second half of March, while the S&P 500 surged as much as 58 percent from a 12- year low seven months ago in the steepest rally since the 1930s.
Spending by U.S. consumers rose in August by the most since 2001, indicating the biggest part of the economy is starting to rebound from its worst slump in almost three decades.
Two-Week Slump
U.S. stocks fell today, capping the market’s first back-to- back weekly declines since July, following a bigger-than- estimated loss of jobs and a drop in factory orders.
The S&P 500 has lost 4.3 percent since Sept. 22, including the 2.6 percent decline yesterday that was the steepest since July 2 after a gauge of manufacturing unexpectedly declined and jobless claims grew more than forecast.
“I’m really not too concerned about a minor move like this,” said Leuthold, who has 72 percent of his fund in stocks. “It’s premature to take any defensive action.”
Leuthold said that 25 percent of his equity fund is in technology stocks, while 12 percent is in small- and mid-sized biotechnology companies.
“We think there’s going to be a lot more activity in terms of acquisitions,” he said. “The large tech companies are loaded with cash and willing to diversify in other areas.”
Recovery in Takeovers
U.S. stocks rose the most in five weeks on Sept. 28 as takeovers in the drug and technology industries added to evidence that mergers and acquisitions are rebounding from the slowest pace in six years.
Takeovers involving U.S. companies totaled $50.8 billion in September, compared with $26.6 billion in August and $36.8 billion in July, according to data compiled by Bloomberg. Through the third week of September, M&A dropped by about half in the U.S. to $492.5 billion this year, the slowest pace since 2003, the data show.
Leuthold isn’t convinced stocks will keep rallying in the second half of 2010.
“Valuations would be getting richer at that point,” he said. “We’re not going to make a new high above 1,550 or anything like that. There’s got to be more work done. And the U.S. is a lagging global economy now.”
He says it may take as long as five years before the S&P 500 exceeds its October 2007 record of 1,565.15, and 30 percent of his equity portfolio is allocated to non-U.S. companies on a bet that economic growth rates will be higher abroad.
$2 Trillion in Spending
The International Monetary Fund raised its forecast for global growth next year as more than $2 trillion in stimulus packages and demand in Asia prop up the global economy. The Washington-based IMF said the world economy will expand 3.1 percent in 2010, more than a July forecast of 2.5 percent. China’s economy will grow 9 percent and India’s 6.4 percent. That compares with growth of 1.7 percent in Japan, 1.5 percent in the U.S. and 0.3 percent in the euro region.
Leuthold has 8 percent of his portfolio in foreign banks, and he’s evaluating financial institutions in Europe and Asia.
“Not one of them is an American bank,” he said. “We don’t have American regional banks because our concern is that they seem to be maybe overexposed to commercial real estate, where you maybe have a second shoe to fall.”
U.S. bank shares are set to drop because loans made for commercial real estate will sour and lenders will need to raise more capital to cover credit losses, according to Mike Mayo, an analyst at CLSA Ltd. Regional banks will perform the worst among lenders because they have the most exposure to loans for commercial real estate, Mayo said on Sept. 22 at a conference hosted by his company in Hong Kong.
The Leuthold Group is an independent, top-down, quantitative and contrarian institutional research shop based in Minneapolis, MN. They produce excellent market research (I think it was the Blue Book that I use to read) and their funds are managed accounts which allow investors to get in and out easily.
Back in early March, Steve Leuthold told investors to "buy stocks now or you'll regret it". He was absolutely right then and I think he's right now. Forget retesting the March lows, the stock market is heading higher.
How do I know? I don't. Nobody does. That awful U.S. employment report shocked me, with huge downward revisions to previous reports. What did market participants do? They bought the dip hard. Don't underestimate the amount of liquidity and performance anxiety out there. And remember, in these markets, small and nimble is beautiful.
***UPDATE***
For an alternative, bearish view, read Tim Knight's Lying in Wait.
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***UPDATE***
For an alternative, bearish view, read Tim Knight's Lying in Wait.
"And PS: Leo, your statement that there is no catalyst for a major upheaval is horrifying. Half the stories on this website (if not more) make a convincing case for a possible major upheaval in the near future."
The only thing that really worries me is what Janet Tavakoli so eloquently discussed with Max Keiser. However, for counterparty risk to spike, you need a catalyst of monumental proportions. There is nothing on the horizon. No more Bear Stearns hedge fund imploding or any major hedge fund imploding, no investment bank going bankrupt, nothing. We can speculate all we want, but if a catastrophe is to strike, we're pretty much all screwed. It won't matter if you're rich or poor, the world will be doomed.
I prefer to keep a cool head and think that accomodative monetary and fiscal policies will slowly work their way through the global economy. Nothing great, but it will get better.
Second verse, same as the first. Guess we'll see, right?
April 10, 2008
Q&A with Steve Leuthold
Stocks: Why the Bottom May Be in Sight
http://www.businessweek.com/magazine/content/08_16/b4080067330758.htm?ch...
Exactly. Lets stop treating Leuthold as if he's some kind of prophet. He's just another shill. "Leuthold Global Clean Technology Fund"? Give me a break.
Leuthold is simply getting press off the "Oooh, he was bearish and now he's bullish" line of BS.
Investing because other moron fund managers are chasing performance after their failures is not a reason to invest - especially in a mutual fund that bills itself as only taking "prudent investment risk".
Oh, and Jim Cramer's favorite mutual fund, CGM Focus, is still down fractionally for the year, even after a 50% rally.
Is there actually a fund manager besides those at FPA that is bearish or at least realistic on the economy, or are they all out pushing their funds to see if they can get
Joe Six-Pack in for one more round? Fool me once, fool me twice, fool me three times, four, five...?
Give me a break.
"Is there actually a fund manager besides those at FPA that is bearish or at least realistic on the economy, or are they all out pushing their funds to see if they can get Joe Six-Pack in for one more round?"
http://hussmanfunds.com/
As Jim Rogers might say, "This article is bad for my nervous system."
Steve Leuthold turned totally, idiotically bullish last Fall when it was obvious to anyone that that was a no-no, and the results were not exactly fun for shareholders (I had - and have since sold - Leuthold Global; good freaking riddance). The Leuthold funds can hedge - they weren't.
Oddly, if things are so great, why is Leuthold putting out the new Leuthold Hedged Equity (which came out last month.)
He may have made a bottom call in March (apparently figuring that, he was wrong the Fall before, why not try again?), but the Bloomberg piece wasn't until a few months after and he did not take the funds to their full equity allocation until then. Some of the funds were hedged to some degree a couple of months into the rally.
Now he's telling us that things aren't fundamentally good, but the "psychology" is now good enough that the market can go up to 1350? So, because some of the economic data is the worst in decades, the psychology is better? This is about as painfully stupid and dangerous as Hennessy of the Hennessy funds saying that the Dow is "a sure double" from here.
Leuthold Core is 70% invested and he is bullish. Steve Romick of FPA Crescent is bearish and has a large cash position, significant bond position and is short some stocks and is far less in equities than the Leuthold funds. Still, FPA Crescent is still beating Leuthold Core YTD. That does not say a lot about Leuthold's quantitative analysis and/or stockpicking.
But, a long story short - buying stocks on poor fundamentals but because of "psychology" and "momentum" is a shocking choice for a mutual fund that is supposed to be about - at least some degree - being more conservative and having some degree of care about protecting principal. So, is this the Leuthold Core fund, or the Leuthold Core Momentum fund?
Mutual funds aren't the greatest vehicles for timing markets, and if this is a time for being nimble, I have zero faith in Leuthold, who may have been right - but for the wrong reasons - in calling a bottom in March (but, and again, let me remind that the prophet Leuthold tried calling the bottom last fall and got his bearded ass handed to him) and now he's doubling down his bet.
Give me Romick of FPA - who actually cares to be cautious for his investors (and he offers stellar, well thought-out quarterly letters and conference calls) and still succeeds - instead.
And I'll agree - Friday wasn't buying the dip, and anyone foolish enough to do so after the economic numbers entirely deserves what they get.
And Hennessey's foolish, "Buy stocks...because what else are you going to put your money in?" comment is
particularly upsetting.
And really, Leuthold going on "momentum"? I was not
aware that Leuthold had suddenly become AQR.
Leuthold goes on hundreds of indicators -
are any of the indicators possibly making him aware
that the economic data is the worst in decades? If
Denninger can - on zero budget - make tens of graphs that spell out
in terms that I think few can argue with that
we're screwed - or at least are in some serious trouble
- then what world is Leuthold living on? How in anyone
in their right mind say that things are getting better?
Nothing has changed in the last year aside from the fact that Wall Street got a ton of money - none of which went to fixing any issues. Toxic assets still there, employment worse, FDIC broke, banks in worse
shape, commercial RE, should I go on?
If
this turns again, Leuthold clearly isn't worried and
is simply going to sit in his own mistake as he did last Fall.
And PS: Leo, your statement that there is no catalyst for a major upheaval is horrifying. Half the stories on this website (if not more) make a convincing case for a possible major upheaval in the near future.
"Eight years of Bush...."
For a second I thought I was in the comments section at HuffPo.
I can't say "W" was my favorite U.S. president and I am quickly becoming disillusioned with President Obama, who I supported in my blog. He has to prioritize and get to work on the economy by introducing new measures to spur growth. America doesn't need more Wall Street bailouts, it needs a new industrial policy for the next century.
"Government stimulus has NEVER worked. When economies recovered in spite of the absurd government stimulis, they always received credit, when in fact they were a primary obstacle in fixing the economy. Read about the recession of 1920-1921. You probably never heard about it b/c it was so short, primarily b/c government didn't inact all these absurd policies and the market healed itself."
Ah, the invisible hand argument. Eight years of Bush and you still believe in this bankrupt economic theory? Stimulus works. The problem is they gave it to the banksters on Wall Street, not Joe & Jane Taxpayer on Main Street.
"Ah, the invisible hand argument. Eight years of Bush and you still believe in this bankrupt economic theory?"
<shakes his head side-to-side really quickly in surprised disbelief> Say what?! With all due respect, artificially low interest rates (The Fed), fannie and freddie, SEC, ACORN, and a myriad of other government interventions and programs existed under Bush. Bush also approved the $700 billion bailout, with his famous speech "i must abandon free-market principals to save the free market" -- How are they principals if you abandon them during the times when they must be tested?! Obama simply escalated the failed interventions that were under Bush, and even pre-existed Bush. It's just as absurd calling Bush a free market capitalist as it is to call Herbert Hoover, Keynes, or Karl Marx one..
"Stimulus works. The problem is they gave it to the banksters on Wall Street, not Joe & Jane Taxpayer on Main Street."
Did you wilfully ignore the part where I wrote about the failure of cash for clunkers above? Cash for clunkers went into (and out of) the pocket of Joe & Jane Tax payer. Allow me to bold it this time, perhaps that will make it more legible:
Look at cash for clunkers for a micro example of government stimulus. Here's some results: 1) You get distortion in the market (GM increases production from perceived increase in demand). Meanwhile, demand actually tapers off moreso b/c stimulus resulted in sales of tomorrow's cars today. 2) Stimulus was money taken from Peter and given to paul. 3) It rewarded bad behavior (giving money to people who were irresponsible by getting a gas guzzler, while giving $0 to people who bought fuel efficient cars in the first place). 4) It removed perfectly functioning cars from the market place, that could have gone to charity.
To conclude: Stimulus fixed nothing, caused more distortion, stole money from productive/tax paying part of society, and screwed the poor. Nice.
Stimulus works. The problem is they gave it to the banksters on Wall Street, not Joe & Jane Taxpayer on Main Street.
Yes, the way to solve a problem of too much debt and too much spending is with more debt and more spending. Where do you think these stimulus funds come from? Do you not grasp that whatever is "given" to Joe and Jane Taxpayer so they can spend today has to be paid back with interest by Joe and Jane Taxpayer and their children and grandchildren, that the money spent paying for past consumption can not be spent on current and future consumption and therefore reduces the size of the economy going forward? Do you not grasp that we've been on this path for 30 years as public and private debt has risen from 150% of GDP to 375% of GDP? How long do you think this Ponzi scheme can continue?
"How long do you think this Ponzi scheme can continue?"
Short answer: As long as the U.S. remains the world's preeminent military superpower.
Short and stupid. If you can't do better than some pithy BS non-response, no response at all would be preferable.
"Short and stupid. If you can't do better than some pithy BS non-response, no response at all would be preferable."
It's not as stupid as you think. The biggest Ponzi scheme out there is the U.S. dollar Ponzi scheme, the world's reserve currency. But before you think China and the rest of the world are going to switch over to the Euro, think again. As long as the U.S. military industrial complex exerts its influence, all payments will be made in U.S. dollars and corporate America will profit. The U.S. is still the world's number one super power and they will remain so as long as they have the world's most powerful military backing them up. Very few analysts will tell you that the Iraq war was great for the S&P 500 profits. Big oil, infrastructure companies and security companies made a killing.
"...not a word about where a sustainable economic recovery is going to come from..."
Hmmm, let me field that question. What are the future "growth sectors":
Folks, nothing stays static forever. U.S. businesses cut too many employees and now that inventories are worked off and investment is picking up, they will hire as new orders pick up. They are just going to take their time. Stop seeing disaster all over the place. It's not as bleak as it currently looks. Earnings will come back but they lag the economic cycle.
In a credit collapse unemployment is a leading indicator, not a lagging indicator. If this were a regular recession you would be correct, but it is not, therefore you are, well you get the point.
The economy is in rough shape and if you look at the data in the last GDP report and remove government spending it was terrible. Look at the ISM data without stimulus, it is bad, see what cash for clunkers did for growth? There is no organic growth without intervention and we are a long ways away from private growth. The government needs to get out of the way, period. The stimulus was a joke on everyone to begin with. Sure, we had clunkers and pot hole projects, but now state budgets are so bad they are taking the Federal funding, but not keeping people on.
It gets better. 1/3 of the stimulus was a cruel joke because it gives people a payroll tax boost which means you need a freaking job for any of the benefit. Umm, look at the U-6 and tell me if that stimulus is really helping anyone at the moment. The government cannot create credit and that is the primary problem we have as banks are cutting credit at record rates, see WSJ Meredith Witney (spelling?), which will impact the economy on the short-term.
there are countless other short-term issues to point out that makes me think that we have not seen anything yet. However, we do agree on a few things, no one knows what will happen and the government needs to focus on manufacturing infrastructure as we need to become a producer instead of merely a consumer of goods.
Yes, with capacity utilization in the U.S., Japan, Germany and much of the rest of the world running at record or near-record lows, we're about to see a global investment boom.
This is not a normal investment/inventory economic cycle. It is a deflationary debt contraction that occurs very rarely. See U.S. 1930's and Japan over the last 20 years.
Momentum, market psychology, performance anxiety, liquidity...not a word about where a sustainable economic recovery is going to come from, what current stock prices suggest about future earnings and cash flows.
But don't worry as long as you're "small and nimble", you'll recognize the top and get out before everybody else.
Can the market keep going up? Absolutely. Ridiculously high equity prices did not prevent the Nikkei from rising in 1989 or the Nasdaq in 1999. Why not global markets in 2009?
Equity valuations were silly a couple of months ago, and they've gotten more silly with only the shallowest of pullbacks. The bears keep expecting an end that hasn't come. With many seeing the end now, one does have to question whether it will happen.
That said, who's buying? Certainly not value investors. Looks more like a bunch of momentum chasers, both professional and amateur. The last thing I'm worried about as an investor is the market running away to stupid valuation levels. It always--always--retreats from those levels. The higher it goes, the lower it falls. So as far as I'm concerned, let it go to the moon.
I have many clients around the country in many different industries, and I don't see growth occurring. Sure there could be a blip up in spending from total anal-constricted mode, but that's about it.
The commercial real estate crisis hasn't occurred yet, but it's starting to now, as expected, two years after the residential crisis began. Every banker I've spoken with sees it and is very concerned about it, so I'm not at all understanding how one can say there is no impetus for another crisis.
Higher equity prices can beget higher equity prices, but only for so long. One has to ask why the hell money is moving into long-term treasuries at such low rates? The action clearly signifies minimal inflation expectations and a low growth rate. Nothing I've see yet contradicts this viewpoint.
On ABC's This Week, George Will commented that "cash for clunkers" and other measures (in home appliances) are "canibalizing future sales". True, but how is the government suppose to respond? Do nothing? Until employment picks up, they have to stimulate this economy, even if it is short-term.
Alan Greenspan was also on this morning, stating there is no need for a second stimulus, and predicting 3% growth and unemployment will pass 10%. Even if you're not a fan, you should listen carefully to Greenspan's comments.
"Cash for clunkers" and other measures (in home appliances) are "canibalizing future sales". True, but how is the government suppose to respond? Do nothing?"
you unfortunately phrase that question rhetorically without seeming to give that option any serious thought or evaluation.
then again, you are in the majority, if it makes you feel better.
you obviously haven't read Daniel Hannan's recent contribution to ZH.
I've taken the liberty of copying the relevant excerpt for you & those of your ilk.
"What's the alternative to spending more? How about this: not spending more. The phrase "doing nothing is not an option" is one of the most pernicious in the political lexicon, and is almost never true. By way of illustration, ponder the way in which New Zealand dealt with an earlier banking crisis two decades ago.
New Zealand was the first major country to withdraw all subsidies from its agricultural sector - a reform that was hugely controversial at the time, but that almost no one now wants to reverse. When the grants were terminated, land values fell, and many Kiwi farmers found themselves in negative equity. The bankers approached the government to demand a bail-out. The government declined to involve itself. The bankers tried again, insisting that, if the state didn't step in, there would be a financial collapse. Ministers politely told them that this was their problem.
Result? The bankers realised that it was their problem. Well aware that the last thing they needed was a series of repossessions and auctions, they allowed farmers to reschedule their mortgage payments. The crisis was averted and, sooner than expected, land prices recovered. It's what economists call "spontaneous order".
http://www.zerohedge.com/article/guest-post
"True, but how is the government suppose to respond? Do nothing? Until employment picks up, they have to stimulate this economy, even if it is short-term."
Recessions, by their very nature, are a product of the free market and exist to correct the imbalances of a cascade of incorrect decisions that may have occurred by the free market. It is a self-correcting mechanism. The reason the problems escalated as far as they did was primarily as a result of government intervention. Further intervention will only, once again, delay or worsen the situation.
Look at cash for clunkers for a micro example of government stimulus. Here's some results: 1) You get distortion in the market (GM increases production from perceived increase in demand). Meanwhile, demand actually tapers off moreso b/c stimulus resulted in sales of tomorrow's cars today. 2) Stimulus was money taken from Peter and given to paul. 3) It rewarded bad behavior (giving money to people who were irresponsible by getting a gas guzzler, while giving $0 to people who bought fuel efficient cars in the first place). 4) It removed perfectly functioning cars from the market place, that could have gone to charity.
To conclude: Stimulus fixed nothing, caused more distortion, stole money from productive/tax paying part of society, and screwed the poor. Nice.
Government stimulus has NEVER worked. When economies recovered in spite of the absurd government stimulii, they always received credit, when in fact they were a primary obstacle in fixing the economy. Read about the recession of 1920-1921. You probably never heard about it b/c it was so short, primarily b/c government didn't inact all these absurd policies and the market healed itself.
"Read about the recession of 1920-1921. You probably never heard about it b/c it was so short, primarily b/c government didn't inact all these absurd policies and the market healed itself."
I was just thinking that when I saw Leo's comment that you responded to. It's amazing that historians rank Harding among the worst Presidents based solely on his corrupt cronies alone. Harding's "Ohio Gang" wasn't any more corrupt than FDR's academic theorist brigade or Dubya's big business glad handers, and he actually managed to lower the federal debt in the post-Wilson era.
If Harding (or Andrew Jackson, who actually had the federal debt paid off at one point) saw that we had $50 trillion in debt to account for, with over $12 trillion on the federal side, it would kill him. Again.
Alan Greenspan, are you serious? What, you couldn't find any Madoff quotes?
And George Will is correct. Our whole economy is in debt due to forward buying for 30 years, the only thing to do is FUCKING STOP! You can't fix debt with more debt, it's impossible.
Leuthold was wildly bullish in October of 2008 as well. How'd that turn out? Oh, about down 30%
The August spending pick-up was "Cash-for-Clunkers". I'm sure if you're a player with 4-billon under your wing you sure want to talk the momo up. Same goes for every pension plan and mutual fund owner. Maybe there is enough to push higher on small volumes but at some point there will have to be earnings to support much of the crap that keeps going up. I don't even think we need a black swan - seems like Murphy's Law will catch up to this soon enough. Forget the deficit, forget the dollar, forget inflation or deflation - these are minor compared to the boomers now entering the "expensive for government" years as well as all the real estate downsizing they'll want to do.
The market has animal spirits in control, which means if the economy doesn't turn as the Wall Street pundits believe it can turn down just as fast. This can be seen from the employment numbers. The revision said an additional 784,000 more jobs were lost by March 09. Nothing...income tax revenues are down 20% so it is hard to believe true unemployment is just 9.8%.
As a financial planner, every client I talk to is changing their financial life, especially the boomers. And, these are folks who aren't loaded with debt. Most think the worst is yet to come so they are getting ready by saving, paying off any debt (including mortgages), and cutting expenses. The Fed's liquidity may be going to asset prices (for now), but it isn't going to show up in spending by consumers.
Another "exactly". People forget (or never knew) that "the consumer" is about 20% of the population in terms of dollar volume. Folks with discretionary income who represent most of the area under the curve. Even the dimmest bulbs now realize that just as the "greatest trick the devil ever played was convincing people he didn't exist", the greatest trick Wall Street ever played was convincing working stiffs that the stock market was a good place for their retirement savings. Trust, once lost, is very very slow to be earned again.
Exactly. Anyone with a grain of sense knows the risk/reward ratio in stocks is very high. Anyone trading this market looking for more upside is picking up dimes in front of a steamroller.
here's a 5 year of LCORX vs SPX
http://ichart.finance.yahoo.com/z?s=LCORX&t=5y&q=l&l=on&z=m&c=^GSPC&a=v&p=s
down 1.98% over five years
SPX down 9.39 in the same period
here's its rate of return and ranking
http://finance.yahoo.com/q/pm?s=LCORX
edit - in reading the Bloomberg piece it appears that he is on the ECRI bandwagon (nothing wrong with that - they certainly have been correct up to this point)
and this missive from March 4 of this year
Leuthold Says Stocks Will Surge, Depression Avoided (Update4)
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=ahZohVugqHKU
and I think I actually remember seeing this interview (and wondering who this "nut" was)
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=awoSslr7KvTo
You got to keep in mind that after Thursday's selloff, and Friday's dismal employment report, you'd expect more selling of equities. Instead, on Friday, they bought the dip and the Dow almost closed positive (range was 9,430.08 - 9,524.78). Why? Could it be that market participants are discounting the news, believing the worst of employment losses are behind us? Remember, employment lags the economic recovery so we can get another bad report, or maybe the labor market will slowly turn the corner.
The other thing is that there is no catalyst for a major upheaval. War with Iran? I doubt it. Hedge fund blowups? I don't see it. In fact most hedge funds have reduced leverage and they're performing well as stock markets soared from March lows. There is no systemic shock to the system and central banks are ready to pounce if a hiccup does occur.
Goldman already pre-announced the results on Thursday. Friday was just a working off of short-term oversold conditions from Thursday.
Instead, on Friday, they bought the dip...
Leo, did you not look at the chart? they bought the dip for about 5 minutes, then dumped, then bought for 15 or so minutes, then dumped. classic distribution to suckers.
In most recessions, yes, unemployment lags, but this is not most recessions of the past 80 yrs. we've got deflation, massive overload of debt on all levels. perhaps unemployment is still a laggard, but there is a case to be made that it is not.
up until a few years ago, the mantra has been the "efficient market"... some things do change.....
"The other thing is that there is no catalyst for a major upheaval"
With respect, the above quote is probably one of the most naive and utterly incorrect statements i've read in quite some time. you discounted 2 items, fair enough, thought I would classify Iran as a potential marker for upheaval. i think just about anybody could list at least 10 more items that have genuine potential as major upheaval.
sorry to say, you've lost credibility with me
+1 I trade intraday and the index I'm trading confirms what you've said about distribution. This applies to the daily charts also. The trouble with fundamental analysts is they completely forget about supply/demand in their analysis. I had money with Steve Leuthold years ago, talked to his personal and their fundamental analysis was most incorrect. Sorry Leo, I'm not drinking the same Kool-Aid as you or Leuthold are. The chart never lies, analysts & fund managers do.
If you want to see the charts, I'd be happy to send them to you.
I have to disagree a bit. The basic quant analysis is very strong. But it's not taking into account the bigger picture of where it's heading. If this was an extrapolation from 20 years ago it would be completely sound.
Number one is corruption of the patent system. This sets up a freezing corruption of the creative process. Strangling out any new economic engine of growth as it is fought and resisted by monopoly titans who are threatened by it.
Number two is crisis mergers with DEVESTATING effects. Things get mergered wtih no advantage to either party but simply have to happen but there is no other institutions able to merge with them. Think bar 1:30 am everybody wants some sex some people get the bad chics or the butthead guys. While those who can't pair up end up starting fights with each other because it's a non intimate expression of the process.
So what kind of economy can you build with these institutions? The business cycle or "accounting fraud" cycle will force these pairings or bring the grim reaper. Will corporate america be more interested in survival or more interested in healthy relationships?
All the crappy stupid mistakes corporate america made with it's customers and those they feed off of, will reach intolerable levels of consumer disatisfaction.
The analysis is perfectly sound it's just not quite reading the evolutionary point of the process.
Because it's worked before it probably thinks it will continue to work. Not seeing that too much conflict will have to be internalized into to many institutions and too much antisocial behavior will turn into internalized self destructive behavior. All inequality stems from manipulation of the self/other boundry and these will become the mergers that try mens and womens souls.
Go long razor blades. America is about to become cutters as other loathing becomes self loathing.
They bought the dip hard
Leo, I like your writing and read most of your stuff on NC.
The daily chart of SPX from Friday simply does not support your conclusion of buying the dip hard. Please let me know what I am missing.
http://data.cnbc.com/quotes/.SPX/tab/2