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Bullish Views From Barron's Roundtable
A summary recap of the bullish groupthink gripping the Barron's Roundtable. As David notes: "The emerging consensus is that everything is just going to be fine and that we should expect nothing more than a second-half economic slowdown, and that if there is a sharper turndown the monetary and fiscal spigots will be turned on even harder. The market is seen no worse than fair-value. Treasuries remain the enemy."
The age old question rises: with everyone bullish, who is selling?
- Felix Zulauf: “Cyclical forces are bullish … the market probably has 10% upside from here… my next recommendation is to short government bonds.”
- Abby Joseph Cohen: “We think global growth won’t be too bad in 2010 … we’re forecasting S&P 500 earnings of $75 to $76 this year and $90 next year.”
- Fred Hickey: “The stock market will likely be up this year, unless the dollar collapses.”
- Scott Black: “I figure S&P 500 earnings will be closer to $66, which puts the market at 17.3 times earnings, about the historic norm.”
- Oscar Schafer: “Liquidity and another stimulus package will keep the market up.”
- Marc Faber: “The S&P 500 won’t revisit the March 2009 low of 666 in nominal terms ever again.”
- Meryl Witmer: “Fifteen times earnings seems about right for the market, and earnings could grow a little this year … fair value isn’t so different from where the market is now.”
- Archie MacAllastar: “I’m an optimist, I expect the S&P to earn $75 to $80 this year. Public participation will increase.”
- Mario Gabelli: “You’ll be up 5% to 10% in the first half of the year … interest rates at some point will top 4%.”
- Scott Black: “The underpinnings of the economy aren’t quite as bleak as everyone thinks.”
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One day in the not so distant future, when the printing press can no longer legally operate, when the Federal Reserve can no longer purchase government debt, the banks no longer have a source of funds to purchase government debt and China absolutely refuses to purchase any more US government debt, the Treasury will hold it’s last auction. On that fateful day, the real bond investors will show up in mass. All of them will demand the same interest rate of 20%. The bid to cover ratio will 1.0. The Treasurer will pick up the phone and call the Chairman of the Federal Reserve and say, it has happened.
The Chairman will then order the Treasurer to cancel the auction. He will then get up from his desk, walk across the room to where Society is standing on a chair. Her hands will have been tied behind her with the US Constitution. Around her neck will be a noose made of woven gold and silver strands. The Chairman will look up at her and say, I am sorry it has to end this way. He will then kick the chair out from under her.
She will swing slowly like the pendulum of an aging grandfather clock that has a broken main spring. The momentum of her swing will be powered by the anguish cries of all the soles that lost their lives fighting to make the USA the most powerful and prosperous land on earth.
The next morning a generation named Baby Boomers will awake and look into their cups of plenty and find that the wealth and security handed to them by their parents and grandparents had evaporated during the night. They will look out their windows towards the ocean and see that the high tide has finally reached and washed all of their sand castles into the sea.
And they will weep, for they are now lost.
AMEN
well said --
Sorry Tyler - have to call BS on you. Faber is a total bear. From the full article:
The U.S. stock market could correct by at least 20% relatively soon. When the S&P drops by more than 150 points, the Fed will print money like crazy. The S&P won't revisit the March 2009 low of 666 in nominal terms ever again. In real terms, it's an other story.
And from earlier in the article:
Faber: That is why we are all doomed. The deficit will be above a trillion dollars a year as far as the eye can see. One day, Mr. Bernanke or whoever is at the Fed will have to increase short-term interest rates. When that happens, America's interest burden will go up dramatically. Interest payments could go to 35% of tax revenue in 10 years' time, but that is an optimistic assumption. I'm inclined to think 50% of tax revenue will go toward interest payments on government debt in 10 years. Then you are bankrupt. There is only one way out -- the Zimbabwe way. You will have to print and print and print.
Faber is a bear. You should know better than to take that out of context. Shame.
Thanks for putting Faber's comments in context. It did not sound right as stated.
ChanceIs,
Not tylers fault. Faber did a total reversal last week. He got religion. Went from El Toro to smokey the bear in a matter of days. This way he's got both ends covered. See what I said back when?......I told you so.
Regards
See this article.
http://www.financialsense.com/metals/greenspan1966.html
Green span says, with out running the printing press economy never grows. So every one know this is a ponzi scheme.
I like your ideas and thoughts. by chat Greetigns..
Waterdog you should write novels, very poetic end to the madness.
I have one question...was there a plentiful supply of the best Hawaiian purple bud at the Barron's Roundtable because they had to be smoking something or is it more a case that they just cannot let this massive ponzi scheme collapse?
the latter
AMEN...when will someone make these fools accountable. They are almost as bad as the dopes on cnbc who kept telling people to sell equities consistently from March to September of 2009. After the October they jumped on the bandwagon and acted like they did joe investor a solid. Lock em all up
Its easier than that. Barrons is great, so long as you use them as a contraindicator. If they say buy, then I want to sell. This just reinforces my view on gold/silver being the go to place to be.
I ask only one question. every bear from maine to spain and that includes tyler durden have basically thrown in the towell that the mkt can decline. the constant up up and up more almost daily for 10 1/2 months have beat every bear into total compliance and submission. every indicator we've gotten over the last 10 months wether huge insider selling, $300 bil of stock and secondarys issued,investors intelligence bears to the lowest levels since 2007,total short interest declining in what 8 of the last 10 months and 30% from the highs of march and on and on yet the mkt never falls. throw in literally 1000's of stocks having run 300-1000% and we have the thought of an unsinkable titanic.OH I ALMOST FORGOT 2008 AND THE TRILLIONS OF BANK LOSES WORLD WIDE AND WHY WE FELL IN THE FIRST PLACE. see the gov't knew if they ran the mkt to the moon all would forget about why we really fell and all the problems still out there.expect the unexpected when so many people have the same thought.YOU HAVE BEEN WARNED
http://www.youtube.com/watch?v=-5O8sHU-DAk&feature=channel
I think you are right here...good luck trading!
as you say, expect the unexpected.
can a lie become the truth if the lie continues long enough?
can it makes itself the truth by clever manipulation?
No.
Yes.
But they have to change some laws of physics first. Which is easier to do than you think, this being the primary purpose of propaganda.
This is the type of shark than needs to perpetually swim or die.
there are mathematical impossibilities that you need to put into the equation as well as the laws of physics.
Try the one of connected vessels as an example: Water will eventually reach its true level. The speed by which the true level will be reached depends on the permeability factor of the resisting strictures.
There are also the theories of the limits of diminishing returns were all accelerating borrowed money can not be repaid as the interest on it becomes higher than your earnings or the production of the country.
Yes! Good luck with trading.
The world was flat for a lot longer than it was round. Fundamentals are not as difficult to over-throw as you suppose.
Good luck finding reality with both hands. In a short time you will neither recognize reality, nor will you care. It will have become a quaint notion recalled by only a few senile octogenarians.
Not necessarily. Most of us know well enough to separate our macro-level understanding of economics from our day-to-day assessments of market direction.
We're quite well aware that bear market rallies of 50-60% are not at all unusual (no less a figure than Paul Tudor Jones referred to it as a "bear market rally"), and in the face of massive quantitative easing, they can be even larger and defy gravity for quite some time.
The market had already taken most of the problems into account by March 2009 and cared much more about the actions of the Fed and the Treasury from that point forward.
Yes, most of us are bearish on the economy long-term. Some of us (myself included) are bullish on the market short-term. Those aren't necessarily contractictory. In the future, one or both is likely to change.
it was the best Hawaiian purple bud, sure
Zulauf is really good, maybe he is telling us that the market will be supported, as I don't see any one else buying.
SS
cute one-liners. thanks for sharing sell-side folkers.
boy, is it funny hearing / reading "S&P earnings of ..." just tootriple entendre rich.
why does faber always try so hard to leap out from the page with such asinine proclamations.
Marc Faber, in an interview with Henry Blodget, after the round table meeting, has turned bearish and taken the contrarian view of the majority of the round table. Interesting. What does he see? Over confidence?
what's the most crowded trade right now, i forget......
I guess bullish is in the eye of the beholder. My headline, based on the quotes provided by Mr. Durden, would be, "Barron's view: we dunno, but we've got our fingers crossed."
The above mentioned analysts probably have a keen intuitive feel for the market, and whether they factor in or not the huge expansion of the Fed's monetary base - and quite possibly some covert PPT stock futures/options purchases, they probably understand somehow the market is going up because of the rapid debasement of the US dollar.
The debasement of the dollar may also lead to rising earnings and some small improvement in the economy. No doubt in the longer term these Fed policies are counter-productive, but not quite yet.
While it is possible that the US dollar could suddenly lose much of its value, right now most in the world seem accept trillions more of the stuff without question - through some contorted logic about deflation or the Euro. Why should we complain? This may be the last chance to make money before worse things happen.
$ short, Treasury short, oil long, gold long,stocks long, commodities long
Funny how wrong all these pundits are about to become...what's that called complacency?
Funny how wrong all these pundits are about to become...what's that called complacency?
Funny how wrong all these pundits are about to become...what's that called complacency?
I thought the Barrons roundtable was uncharacteristically depressing. Yeah everyone was bullish on the short term, another 10 to 20% but after that we are all doomed seemed to be the theme. Even Abby Cohen seemed uncharacteristically subdued. David cherry picked those comments and most of them had a second half to the quote.
Abby Joseph Cohen looked like she was dressed for a game of paintball.
Seriously, did you expect any of these hucksters to embrace reality and talk down the market? Same B.S. as in '06-07, & '99-'00, ect...
It would be like Chevy dealers saying that most of their car fleet are crap..
"everyone buy, buy buy...so my commissions go high, high,high..
Well, maybe things are looking rosy for those of us at the top of the socio-economic scale. When you live in cities that float on clouds and the Earth is 20,000 ft below you its kinda hard to tell how the little people are faring.
Not to matter, between gated communities, posh apartments in Manhattan, limousines, Porches, and all the amnenities money can buy, its hard to feel your pain.
About the only contact I have with the common man is when I ring the bell indicating that dinner is to be served.
It would be like Chevy dealers saying that most of their car fleet are crap..
yeah hp12c
its true.
i have a old 1992 mercedes SL 500, its better then a new corvette.
If we just forget fundamentals for a moment and think political, it might be that the market has a decent year. Remember, about the only thing 'good' that the administration can hang their hat on is the stock market. Do we think they will actually let it fall, at least before the Nov. elections. Employment won't be much better, probably worse by then. The housing market will still be bleeding foreclosures. I doubt they'll figure out how to play war properly by then. The health care bill -pass or fail- has pissed off a majority of the independents... Need I say more?
Of course, by saying they have some control over the market that means I'm implying they are somehow manipulating the market. Now they wouldn't do that would they?
Moin from Germany,
more herding....
Investors forecast gains in each of the nine countries represented in the Bloomberg Professional Confidence Survey for the first time since the data began in 2007.
The sentiment measure for the Standard & Poor’s 500 Index climbed 35 percent to 54.37. That’s only the second time the reading exceeded 50, signaling participants anticipate a rally in the next six months.
Barrons ....reminds me of a "Retirement Home"....
Full of gray haired has beens....who had their day in the sun.....and rain....
Barrons needs to reinvent itself....
Faber did an interview on Bloomberg where he indicated that he may short the S and P. That doesn't quite agree with his comments posted here.
Yea, faber changes often, if you follow his BDG articles it is even more frustrating, he changes course from one issue to the next like the daily tide. I once heard him say in 2007 that stocks would do very well because the Fed would start printing alot of money as soon as recession comes, and then we had that fateful day when China was down 10% less than a month after Faber's pronouncement which kicked off the downturn. In a way he was correct because the fed did cut desperately, and the stock market re-visited new highs in 2008. He is on the same train of thought now, but cannot quite make up his mind so he hedges his position by saying US stocks would outperform emerging markets, but would not commit whether the global stock market would be up or down in 2010. Where he stands of course depends on where he sleeps, now he is happy with his pretty mistresses in bangkok and hk, so...
Faber on the same page as Abby Joseph Cohen?
Barrons usually interesting. The round table is- how shall I say, balanced nonsense. At least they backtrack and see how these jokers do y/y. This give you some idea about what you are getting if you pay attention. Gabby is always buying something, Abby is always MOR, Archie is deep value, and so forth....Occassionally, you get a gem idea, mostly it is, 'nothing here, move along." = balanced nonsense.
When everyone's thinking alike, someone's not thinking.
--Patton
The next leaps out of the shadows will be, first, state and local government U.S. spending and employment cuts. This type of spending is always very politically strategic--designed to smooth out cycles and keep the supply chain in place. It will have an unexpectedly and understudiedly devastating impact on the economy. Everyone will be saying: our models are predicting thus and so, and yet it's turning out VERY differently. Why? The reason is that in 50% of all transactions in the U.S., one of the parties is a government entity. When liquidation occurs--when government does what SO many want it to do, that is, remove itself from the society--it is no joke. Take liquidation seriously, and study its effects in the oh so boring, tiresomely nontheoretic, ridiculously unsexy on the ground economy.
And that leads to the second effect: further deterioration in the supply chain, which began--in classic fashion--in transportation, moved on to agriculture, and is now creeping into utilities.
To distract you from this? Currency race to the bottom gambits. Oh, and don't forget corporatist "consolidations" making you think something is actually happening in the economy. A part of this is the "bailout" of the banking system. To know the meaning of it, read Piero Sraffa's very insightful comments on Mussolini's manipulation of the banking system. It is Sraffa's 18th brumaire of Louis Bonaparte (if you happen to be literate).
The Goebbels side of Mellon style liquidation is to make you think that something ELSE is going on besides liquidation, to make you stick to your peasant/petit bourgeois playbook (gold, manipulated markets, "moral hazard" and the rest of the mediaeval claptrap) and not pay attention to your own progressive destruction. It also plays to the notion that everyone wants to be a dictator ("If I ran the world....")--encouraging you to have your own world view distracts your attention from the real world. Also, you are in no position to engage in liquidation--who, exactly, are YOU?
Liquidation--government removing itself from the society--is very, very poorly studied. I learned from a professor of supply management that there is not a SINGLE book on the history of supply chain maintenance and deterioration, only various contemporary technical supply chain studies. Very bad--supply chain deterioration is the major tool of liquidation. Supply chain problems are the true canary in the coal mine, because they are the on the ground economy.
Re Faber quote... the danger of posting headlines (ZH would not knowingly post this out of context).
Also, don't you just love the delicious irony of the S&P low of "666"... kinda says it all doesn't it.
Yeah, it does! Because a random 2000-year-old numerological quirk of the Christian holy book intended as an insinuation about particular a Roman overlord has a lot to do with the low of a particular index of the American stock market in March of 2009 (if you remove the last two digits).
Amazing how they saw that coming.
Hey, look, that cloud looks just like Jack Nicholson!
I don't here anyone bringing up stagflation, which is exactly where I think this thing is headed. Price increases announced over the weekend from fdx, sbux, ce, amr, Tokyo steel. A pretty diverse cross section of the economy. We've got cargo, coffee, chemicals, transportation and steel....
With the consensus so well entrenced - great GDP numbers thru the first half with a so-so second half then why would the market response be in higher share prices - if the market is at all forward looking it is at best a range bound proposition...HFT and GS not withstanding
Historically speaking........
http://www.jolietpubliclibrary.org/Digitization%20Projects/The%201930s/D...
Abby Joseph Cohen reminds me of a Stepford Wife, just blathering whatever she is supposed to.
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