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Guest Post: The Recovery, The Rally And Our Portfolios
Submitted by Michael Cembalest, Chief Investment Officer, JP Morgan, Global Wealth Management.
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Top is in. Abby Joseph Cohen just declared a bull market.
Love the closing comment in that interview: Kudlow, who is famous for comments like "goldilocks economy" at djia 13-14k, complimented Cohen on her track record, which....is.....well lets just say is about what you would expect from an economist
I particularly liked her call in March 2000 when she was bullish on tech stocks and was advising investors to carry 35% of their portfolio in tech. Anyone who listened to her then is probably just now recovering from bankruptcy. She also called for the S&P 500 to finish at near 1600 that year.
This was a great call too. She was only off by 772 S&P points.
http://www.cnbc.com/id/22101808/
By: Greg Levine | 04 Dec 2007 | 05:30 PM ET Abby Joseph Cohen, chief investment strategist at Goldman Sachs, says the U.S. economy will rebound in mid-2008, but the next few months will be bumpy.In an interview with CNBC, Cohen explained why she remains bullish, how the recovery will look -- and what she foresees for the financial sector.
She says the S&P 500 will hit 1,675 by the end of 2008, a gain of 14.5 percent over 1,463 at market close Tuesday.
This sucker's going down sooner rather than later.
I agree with you - nobody left to squeeze.
morning after walk of shame...
double post.
I sure hope so. It's like a band-aid. Pull that shit off fast, not slow. Get this depression done with.
America needs an enema, detox and intervention.
This whole thread is evidence there are still lots of shorts left to squeeze
(moi included). My guess is that after a couple of years, history books will
describe this period as the "great ultrashort bubble" or "treasury doom and
gloom bubble" or something of the sort.
nice to see you again dying bear!
in that order?
--chunkylover42
Long winded explanation of how the Fed kicks the can down the road by pushing forward demand through artifically lowering the rent on borrowed money. Typical of systems with finite inputs that promise infinite compounding outputs. From Bernie Madoff to Social Security to fractional reserve banking. A not very bright ten year old could work out where this thing is heading. All the morons herding towards the cliff with the corporate media whores cracking the whip in encouragement deserve everything that's coming to them.
Yes indeed..
Agreed!
OECD 2006 2007 2008 2009 2010
GDP at market prices 12 421.9 2.8 2.0 1.1 -2.8 0.9
Bernanke: This may be worse than Great Depression
Fed chief says growth will resume at 1% in the second half of this year
PS The math quiz is getting too easy
"Blowupp & burstt bankers and breakers. Pass in your 'soaps' and see it grow!!"
http://memory.loc.gov/service/pnp/cai/2a14000/2a14600/2a14606r.jpg
NEW YORK, Aug 6 (Reuters) - The new bull market in U.S. stocks has begun and possibly started in March, Abby Joseph Cohen, chairwoman of the investment policy committee at Goldman Sachs and Co, said on CNBC on Thursday.
"We do think the new bull market has begun," she said. "It may prove it began in March of this year."
http://www.iii.co.uk/news/?type=afxnews&articleid=7463912&action=article
Buy now are be priced out forever.
These bastards!
With a track record like Abby's, it must be a "new bull market".
Hardy Har Har!!!
Could A Cohen ot JPM explain which branch of activity is going to carry the recovery?
National Bureau
of EconOmic Research
BULLETIN 58
NOVEMBER 15, 1935
4 NON-PROFIT MEMBERSHIP CORPORATION FOR IMPARTIAL STUDIES IN ECONOMIC AND SOCiAL SC!E.NCE
BROADWAY, NEW YORK
Production in Depression and Recovery
Copyrigbi 1935. National Bureau of Economic Research, Inc. A. BLISS
In 1934 recovery in the physical volume of world pro
duction continued. Although basic 'commodities 'did not
increase in output, those used as industrial raw 'materials
did advance some 6 per cent, reaching a level 16 per cent
above the output of 1932. Partially offsetting this increase,
there was a decline of 2 per cent in the world's output,
crude foodstuffs. Greater recovery has occurred in
purely industrial activity (mining, manufacturing and, in
most countries, construction). World output in these lines
in 1934 was roughly 10 per cent greater than in 1933 and'
24. per cent above 1932. That the improvement has continued
into the present year is indicated by monthly estimates.
I think by the end of August the market will realize (is realizing) that 3% Q3 GDP is fully priced in here.
Then they start looking into Q4...Hmmm. The over-under number I would use is 2%. So we're looking at Q3 being the peak then a substantial drop in GDP from 3% for Q4, Q1_2010,Q2_2010.
If the market continues to go up from here then I think that means more are pricing an over-under number of 3% for Q4. If I were a betting man, I would take the under. Reality sets in here fairly soon.
I think the market can't drop without the greed needle fully into the red. Then the fear and greed needles change postiions rather quickly.
RK
This rally has another month to go before "Eraser Head" Geithner and "Bowl Hair Cut" Bernanke take the blow torch off of it.
take the blow torch off of it.
But that's the point. They can't. The most charitable guestimate is they want the Too Big To Fail banks capitalized enough, positions unwound enough to do the next leg down on their own.
Do I think it's going to happen like that? No. That would suggest there is some actual difference between government interests and banking interests.
I think they are gunning valuations no matter what. That's not a crime though.
I will now get a bit theoretical and describe this process from another point of view. First of all the premise which is prevalent in the financial industry and the media is the premise that systemic behavior, when given a time period T>5 yrs exponentially goes to the upside.And that premise is blatantly false, because a) it is not a matter of linearity or exponentially but a matter of input and output b) not knowing for something called " concentrated probabilistic point of defined behaviour in a open system of multiple variables" c) not using chaos theory when comparing up periods or down periods for more accurate state of the system d)fundamental premises used to describe the system and interact intra-systemic are dogmatic theories, not empirically verifiable facts.
Now, it would be devastating for the financial system to use the above mentioned tools in this way to describe the system and interact with the system, because it would show that the system is highly chaotic ( mind you, they don't use chaos theory as a tool) and it is empirically impossible to know the input, and thus the output, also can not be known.
now what they have left is a wide range of mathematical tools which are, individually correct, but are systemically unusable for any description of the nature of the system and its behavioristic characteristics.
what im trying to say is, that all those people, all those analysts and CEOs of big companies preach voodoo theory and have no idea how the interact with the system or describe it, not to mention that economy as a science itself is not a positivistic science and it it not a science based on facts but prevalent historical patterns ( which are false because not looked from the right perspective )
i also don't know will this help you or not, but from the models i use ( based on a deterministic chaos and probability ) the outcome is REALLY not nice and in the next 3-6 months when all systemic support fails, will we see a devastating unraveling of the nature and fundamentals this false system posses.
The answer is jobs because the question is what powers a 65-70% consumer spending driven economy. Wall street and corporate executives became so ego-centric they actually began to believe their own hype, that they made the world go round and that consumers were completely dependent on them.
The macro-picture completely slipped away as each corporation competed against the other, moved jobs overseas, middle and back office offshoring, and cut headcount to the bone. They acted independently of each other but in aggregate it destroyed the entire economic consumption picture (that is where the models break down - good macro models and individual business models but poor systematic models combining the two comprehending tipping points between individual actions and macro).
Meanwhile government allowed these corporations to pay little or no taxes and provide subsidies in return for campaign contributions - when small and medium sized businesses generate tax dollars and real jobs growth - the survival of the USA is dependent solely on encouraging the growth of these smaller businesses and we NEED POLICIES TO ENCOURAGE ENTREPRENEURSHIP or the system will fail under the weight of all the unemployment and lack of spending.
Without housing equity, 401(k) profits, and secure jobs (unemployed + worried workers waiting for the next round of layoffs) to fuel spending (we levered everything to live for today but tomorrow came), it doesn't matter how great your product is if there is no demand due to lack of funds. It's so bad, we have to tax the population to provide funds so that we can give $4,500 to incent individuals to buy a car. The President said it, "We're out of money".
The economic bears are right, the only question is timing and how long this can last. Cheerleading is trying to buy time before the inevitable. There are many other economies around the world that are in the exact same situation. I do not look forward to this, I just want to understand this and position myself.
For modeling, companies might want to use a higher discount rate for longer term projects (LT hyper-inflation) and they shouldn't expect long term growth to exceed GDP (then they would eventually be larger than the entire economy - an impossibility). So watch the debt levels as interest on that could be a killer down the road after you have acquired all your competitors and there are no more redundancies to benefit from.
Andy Xie is out with a new and worthwhile commentary:
China Counts Down to the Next Bubble Burst
http://english.caijing.com.cn/2009-08-05/110220584.html
http://www.federalreserve.gov/releases/g19/current/g19.htm
any other data I should input when updated as the consumer falling flat on this face other than revenue to the fed?
I work Corporate "at one" and there aware but net working capital must keep us alive. For decades we ponder top to bottom nuckleheads.
http://market-ticker.org/archives/1302-Same-Store-Sales-Stink-July.html
Great analysis by Denninger about consumer spending ...
Thank you for the link and you guys are such a help to people are concerned and working our asses off to build a civilization for our grandchilden. You Folks are a immense help. In advance thank you for being Men in troubled times
viewtopic.php?f=14&t=2&p=1816&hilit=synthetic+cdo#p1816
I listened to testamony today from timmy G.and call money should be monitored to effect naked short hedging which
is topical discussion again as it should be in a broader context on Call Money Rates.
His focus was housing and tho crucial averts the true systemic risk.
http://www.bloomberg.com/apps/news?pid= ... pCTPoDKgPo
*blush*
don't let technicalities distract you ... just read the report from Deutsche Bank here on ZH ... the country is in a shit hole unseen in the history of mankind ( well maybe except Rome)
when you eliminate all the noise and little technical unimportant stuff the picture is not only black, it is beyond that ..
thanks
These data may have inspired A Cohen and JPM ?
http://research.stlouisfed.org/recession/TrackingTheRecession.pdf
You are quite possibly correct that AJC and JPM are looking at that (or something similar) in their predictions.
To which I would point out that if we were in your everyday inventory recession, I might start to get on board with that line of thinking. But we aren't, this is debt deflation and it's a slow, painful process. Note that the analysis only considers recessions since 1948. Conveniently this leaves out the last time we experienced a recession of this nature and magnitude.
So they are either using this relatively useless data or they are whores. You decide.
www.markit.com www.ism.ws www.ifpsm.org
Disconnects happen but data cannot never hurt.
I feel as many that the exhaustion and more consumers are paying attention at a pace to be determined. My wife is a block captain and we see the monthy stats. I just try as many do here also to correlation points. Opinion vary but information with regional reality just help me along. I am lucky I work in a very select peer group and listened to lessons learned from folks like you also. Best regards
Thanks. Very interesting read, liked the one sentence about China.