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Rosenberg's Top Ten Reasons For Cautiousness In 2011
David Rosenberg closes the 2010 books with his top ten reasons to be cautious for 2011. We are fairly confident that none of these will come as a surprise to regular readers of Zero Hedge. The only real risk to the now endless melt up, in our view, is that actual news actually start having an impact on stocks. If that ever happens, look out below.
TEN REASONS TO BE CAUTIOUS FOR THE 2011 MARKET OUTLOOK:
1. In Barron’s look-ahead piece, not one strategist sees the prospect for a market decline. This is called group-think. Moreover, the percentage of brokerage house analysts and economists to raise their 2011 GDP forecasts has risen substantially. Out of 49 economists surveyed, 35 say the U.S. economy will outperform the already upwardly revised GDP forecasts, only 14 say we will underperform. This is capitulation of historical proportions.
2. The weekly fund flow data from the ICI showed not only massive outflows, but in aggregate, retail investors withdrew a RECORD net $8.6 billion from bond funds during the week ended December 15 (on top of the $1.7 billion of outflows in the prior week). Maybe now all the bond bears will shut their traps over this “bond-bubble” nonsense.
3. Investors Intelligence now shows the bull share heading up to 58.8% from 55.8% a week ago, and the bear share is up to 20.6% from 20.5%. So bullish sentiment has now reached a new high for the year and is now the highest since 2007 ? just ahead of the market slide.
4. It may pay to have a look at Dow 1929-1949 analog lined up with January 2000. We are getting very close to the May 1940 sell-off when Germany invaded France. As a loyal reader and trusted friend notified us yesterday, “fighting” war may be similar to the sovereign debt war raging in Europe today. (Have a look at the jarring article on page 20 of today’s FT — Germany is not immune to the contagion gripping Europe.)
5. What about the S&P 500 dividend yield, and this comes courtesy of an old pal from Merrill Lynch who is currently an investment advisor. Over the course of 2010, numerous analysts were saying that people must own stocks because the dividend yields will be more than that of the 10-year Treasury. But alas, here we are today with the S&P 500 dividend yield at 2% and the 10-year T-note yield at 3.3%.
From a historical standpoint, the yield on the S&P 500 is very low ? too low, in fact. This smacks of a market top and underscores the point that the market is too optimistic in the sense that investors are willing to forgo yield because they assume that they will get the return via the capital gain. In essence, dividend yields are supposed to be higher than the risk free yield in a fairly valued market because the higher yield is “supposed to” compensate the investor for taking on extra risk. The last time S&P yields were around this level was in the summer of 2000, and we know what happened shortly after that. When the S&P yield gets to its long-term average of 4.35%, maybe even a little higher, then stocks will likely be a long-term buy.
6. The equity market in gold terms has been plummeting for about a decade and will continue to do so. When measured in Federal Reserve Notes, the Dow has done great. But there has been no market recovery when benchmarked against the most reliable currency in the world. Back in 2000, it took over 40oz of gold to buy the Dow; now it takes a little more than 8oz. This is typical of secular bear markets and this ends when the Dow can be bought with less than 2oz of gold. Even then, an undershoot could very well take the ratio to 1:1.
7. As Bob Farrell is clearly indicating in his work, momentum and market breadth have been lacking. The number of stocks in the S&P 500 that are making 52-week highs is declining even though the index continues to make new 52-week highs.
8. Stocks are overvalued at the present levels. For December, the Shiller P/E ratio says stocks are now trading at a whopping 22.7 times earnings! In normal economic periods, the Shiller P/E is between 14 and 16 times earnings. Coming out of the bursting of a credit bubble, the P/E ratio historically is 12. Coming out of a credit bubble of the magnitude we just had, the P/E should be at single digits.
9. The potential for a significant down-leg in home prices is being underestimated. The unsold existing inventory is still 80% above the historical norm, at 3.7 million. And that does not include the ‘shadow’ foreclosed inventory. According to some superb research conducted by the Dallas Fed, completing the mean-reversion process would entail a further 23% decline in real home prices from here. In a near zero percent inflation environment, that is one massive decline in nominal terms. Prices may not hit their ultimate bottom until some point in 2015.
10. Arguably the most understated, yet significant, issue facing both U.S. economy and U.S. markets is the escalating fiscal strains at the state and local government levels, particularly those jurisdictions with uncomfortably high pension liabilities. Have a look at Alabama town shows the cost of neglecting a pension fund on the front page of the NYT as well as Chapter 9 weighed in pension woes on page C1 on WSJ.
In the absence of Chapter 9 declarations or dramatic federal aid, fixing the fiscal problems at lower levels of government is very likely going to require some radical restraint, perhaps even breaking up existing contracts for current retirees and tapping tax payers for additional revenues. The story has some how become lost in all the excitement over the New Tax Deal cobbled together between the White House and the lame duck Congress just a few weeks ago.
Source: Gluskin Sheff
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Either people aren't aware of the muni problem or they think the Fed or Congress will bail them out. I think this is less likely, as the appetite for bailouts is at a post-2008 low right now.
Its all a complete illusion. Congress has nothing to 'bail' anyone out with, all they can do is promise that youll get another job and pay more tax revenue. Its all a fuking joke and we're the ones being laughed at.
House prices to bottom in 2015 eh? 23% reversion to the mean....What a load of pig shit!! Deflation is going to eat the US economy back to the Stone Age. Think I'm a little melodramatic?? Go have a look at Detroit housing prices. When the doo doo really does hit the fan then you can virtually right these properties down to zero.
using the dallas fed home price index chart, real estate fell against other assets from 1893 to 1920 then bumped along the bottom for twenty more years, the last ten of which were "the great depression".
by far the biggest relative move for home prices was 1998 to 2007. so a reversion to mean/correction/shakeout, call it what you will, could well take a working lifetime.
Generally, true, excepting when NOT true: "real estate fell against other assets from 1893 to 1920 then bumped along the bottom for twenty more years, the last ten of which were "the great depression" we must also realize the anomalies, San Francisco 1848-1873 far greater %/year than almost anywhere in the world..burned down twice BEFORE 1906 Earthquake/fire.. Chicago, including the Great Fire caused by O'Learys cow, still massive continuing growth/price appreciation, since during the cowbow days, say 1865 onward... New York City...continued FOREVER, until it became ground zero for the communistic land/rental grab - the 1945'rent control project, that brought some rental/land to less than zero cash valuations... Washington DC...post WW2 "Federalism' continued since 1945...couldn't lose... Los Angeles...soon as the LA aquaduct from Lone Pine was completed, room for endless expansion...right up thru 1989, THE FIRST real estate bust of consequence...many a movie actor made millions in real estate ponzi - EQUIVALENTS, that actually panned out, against all 'reason'.. but FOR THE REST OF THE USA, yes...just the lands the 1 square mile 'railroad parcels' government-granted since about 1865..THOSE towns grew/appreciated til about PRE-World War 11, been DYING ever since... the recent USA-wide PRICE APPRECIATION is a definite anomaly, bubble, created ENTIRELY by the FED/pseudo-governmental agency-guarantees...is PROBABLY 'over' FOR a long time IN THE USA..but not elsewhere..Real Estate is the great MODERN-MODE Ponzi/bank scheme OF THE 20th century in all the peripheral countries - India, Indonesia, Thailand, Russia, North Korea (yes it will unify, probably SOON)..Vietam...AND Phillipines (finally).
There will never be another financial epoc like this, stare out in awe and wonder at what you see around you. We are all truly privileged to witness these events - they mark a key turning point in the history of the human race. What I now know, what I can clearly see, very few others know (although awareness is stirring) - I am now in the matrix and a walk this land looking at those who don't know these things and pity them and their ignorance. The time to prepare is short and the hour rapidly approaching when you will be tested. Quite seriously it's all down hill from here on - put on your ski's and get ready (actually a parachute might be handy too).
Best wishes and Merry Christmas to all those denizens of the ZH swamp.
Happy Chappy
I still remember the time when Gremlins where the biggest danger... strangely they went away when I stopped drinking wodka like it was water...
In those day, you could also still drive home safely after drinking 2 bottles. Now you're already "drunk" after 2 glasses.
Tyler, Why do you quote RosenWrong all the time? Try this: highlight someone is bleepin right for a change; don't fight the fed, don't fight the tape, the trend is your friend, etc. You weren't even bullish in late August - you permabears are annoying. There is never a time to buy
So I'll ask again: if Rosenberg is so terribly wrong, why is Bernanke doing QE, and why does Fed.gov have to roll taxes back?
Here's a hint: they are all schemes to avoid dealing with the underlying problems in a sustainable way.
Its all just to ensure that nations are so beaten down and bankrupted they can never get out in 50 generations, in order to bring in 1 world govt, 1 world currency, cashless society with a scanner chip in your body that allows you food points, IF the overlords are happy with your productivity stats. Think thats all crazy?
Hell just Google any of those key words then, its all in bills ALREADY passed.
What if you threw a one world party and no one came?
How we get to the end will vary from author to author, but equities reset/adjust to their true value (if price is indeed truth - cuts both ways). Its just going to be a more violent adjustment due to all the POMO/QE bullshit.
No kidding. A 23 p/e for shitty 2-3%
GDP growth is easily twice as much
as Mr. Market is worth. This is a friggin
10 year slog, not a 2 year sprint.
It will be all about #10 in 2011 I believe and that will drive most of the other 1-9 points.
Yo Buck, don't worry about Rosiewrong. The 11th prediction is that either Rosie is gonna be standing in the unemployment lines or Gluskin Sheff is going to change their mission to wealth destruction instead of creation
Crosscurrents December issue had a piece on this topic. Complacency at all time highs, insider selling at near all time highs, mutual fund cash levels at all time lows. HFT is now 70% of market trades. Dollar trading volumes as a percentage of GDP at historic mania levels. Average holding periods at historic all time lows. It cannot be more obvious that this is a traders market. Long-term investors need not apply ...
http://www.cross-currents.net/charts.htm
http://www.propublica.org/article/the-subsidy-how-merrill-lynch-traders-...
The top reason to be concerned about 2011 is that Ben Bernanke is not safely in a prison cell somewhere. Until this man is removed from office, and the process of rooting out criminal syndicate Wall Street bankers EVERYWHERE has begun to take hold, there is no chance that our markets can return to normal, which is to say where the market is a free market, and capital only forms in places where capital is rewarded.
Until then, I suggest everyone return your freakin' Christmas gifts next week, shut your wallet, and watch the whole thing collapse....save for retail sales in NY, NY of course.
The markets were just clearly manipulated moments ago...and it is so obvious that it was that Average Joe will almost certainly evacuate more dollars from equity accounts next week.
Sweet! Isn't this fun? Hey, but don't worry....Steve Grasso will come on the Blow Horn soon and tell you to buy Coal stocks...which will result in absolutely nothing but the further destruction of the credibility of the former capitalist economy in America.
And MORE SHOPPING STORIES FOR THE PEOPLE!
Cdad my top concern for 2011 (or 2010 theres still time) is whatever major disaster they've had planned all along being carried out.
Does anyone actually believe for a second that their plan was to create that phony banking crisis disaster in 2008 so they could print trillions, to help the markets and economy? No these people AREN'T morons, theyve had it planned all along and the only possible endgame is now a sudden total disaster event. Print our currency to oblivion, theyve already done that, the debt is MATHEMATICALLY IMPOSSIBLE to ever pay back already.
For those who know, their plan for 1 world govt and 1 world currency was planned long before 2008 melt down, been planned for decades. The final step is near, and whats to stop them? A congressional committee or a court? Dont make me laugh.
decades?!?
review the protocols and talmud please:
http://www.iamthewitness.com/Protocols-of-Zion.htm
http://www.talmudunmasked.com/chapter15.htm
Hey, if those protocols are enforced, we are all in a heap of trouble. It is important that we know not all Jewish people are in with this kind of stuff. Every group of people has some kind of radical offshoot of one form or the other. The protocols of zion are very demeaning to all non-Jewish people and very provocative. A question I ask is why these folks would let stuff like this leak out?
especially since these people aren't morons and they've had it planned all along.
Oh by the way. which banks are predominantly VERY ACTIVE IN THE HUNGARIAN LOAN MARKET? Yeah, the Swissies and the Swiss Franc needs to be slaughtered !!!!!!!
have at it. their central bank tried and failed but you may do better.
I dont agree Tyler, it wont be some economic news that implodes this pixiedust-up-the-ass market, it will be nuclear bombs going off in major US cities, or something on that scale. Perhaps superbug 'accidental' release from some Plum Island facility which sweeps the nation...convinced of it. What theyve always planned for is first the total bankrupting of the nation, market melt-ups are only 1 side effect of that and meaningless as no one will ever cash out. It will be sudden, some morning soon.
Don't worry, you'll be offered a vaccine for the superbug. It will, in fact, be a working vaccine.
The people who don't follow government advice fail to take it and, of course, die. Naturally, that's no surprise to the folks who take it and live. You'll be remembered--if at all--as the idiot who didn't take the vaccine. Especially in a world of smug conformists.
I've heard there will be nanochips in the vaccine, though.
Pick your poison
Right, and those who do 'take the vaccine', you know, the 'cool kids' will then live a cashless society life where your nanochip will get activated or not for another week depending on your work productivity stats. AH yes...theyll tell tales of those dummies who did not conform around the tiny propane heater after the work busses deliver them back to camp.
Nah, after the first plague passes, people will have bought into the mass death thing. That will make the next one far more plausible--when the vaccine is not so effective.
I was just kidding about the chips.
People will be out on their knees in the streets Thanking God that they were spared and blessing TPTB for the heroic efforts that saved them. I imagine it will be quite mobilizing. Of course, I'll miss that just as I will the rapture.
yes the history of the u.s. government from the bay of pigs to vietnam to watergate to the iran hostages to iran contra to monica to iraq, katrina, afghanistan and the stunning, graceless end of the credit cycle gives one the impression of enormous, secret abilities to control events and master destiny.
Bond bubble nonsense? I understand Rosie wants to say 'I told you so' but he should exit the burning theatre before making any acceptence speech.
If only he would understand the liability of the dollar, and for that matter, all FIAT.
Unfortunately pure economics textbook guys like Rosie cant see whats really going on...the planned bankrupting no one can ever get out of and the Phoenix rising from the ashes into 1 world govt, cashless society, chip activated life extension weekly depending on if they like you or not.
Hate me or junk me or whatever, Im just trying to tell the truth.
Living a lie is hard, but realizing the lie is near impossible when all believe in the lie. Plato's Cave comes to mind. It is true that those in the finance game have a hard time using the common logic that IOUs are nothing more while in IOU form. Paper is paper and nothing more.
"I remember a German farmer expressing as much in a few words as the whole subject requires; ‘Money is money, and paper is paper." – Thomas Paine
Poor Rosie. Maybe he'll have a better year in 2011.
maybe.
When has Rosenburg made anyone any money?
Even Leo the tool is not as useless.
Hilarous.
They are interviewing a fund manager on CNBC.
Quote of the day:
"If you buy a cheap stock because it has value, it doesn't do you any good unless it goes up."
LOL....
He must employ the 19-year video gamers supervised by the Monster Energy Fembots:
LOL, whores.
l o n g woMAN!
Beautiful women (and solely beautiful) are an abundant commodity. All most women (or rather in their case girls) care about is their makeup, have you seen all the youtube videos? Good heavens! Now a woman that can keep up with me on the hill and in a book, well, I like to see that!
Long former collegiate vollyball ladies.
I actually think number 2 and 4 have real breasts!
Are you counting left to right Western style or right to left Eastern style? Remember, ZH readers come from the world over.
Do I get to choose, or must I take them all?
I depends. What's your credit score?
Eny, meny, miny, Moe.
Robot,
your 'robot story' emerging from your 2004-2004 educational experience, rings true, and IS true
....ONLY insofar as you understand FULLY in DEPTH the extreme, disciplined (by painful experiences/educational enlightenment), attention to the individual details
... of each 'opportunity' to buy low that which is going up, likely to continue (for a short while),
... and sell/sell short that which is going down (for a short while, OR forever, into non-existence)
...It is all too simplistic, all too IBD 'dumb', all too true...all too underesstimated,
.. with EGO all too overestimating...such that RULE #2 is 'DONT LOSE, the sucker always has no 'backup plan'
Robot, your pictures...the WW2 "THIS is what we are fighting for, REALLY..."
I think I will only listen to one main commentator now and thats Faber
he has been the only one who has been spot on so far
he called the m,arch bottom and has said he is ultra bearish, we are all doomed but out of all the asset classes becasue of money printing stocks will be a safer bet. I didn't believe him but now he is being proved right.
He even said QE2 will make interest rates rise. he is correct. His next call is for a 10 to 20 percent decline in stocks and then to absolutely buy the f*cking dip before Ben destroys all money
That looks like a good guess. and absolutely buy the dip. the fed will keep pumping in trillions of dollars - QE5, 6, 7 - who knows...they won't stop now...
I agree, Marc Faber has been dead-on accurate about everything.
Emerging economies are going to correct between 10-20% over the next 1-2 years.
Hyper-Inflation is not coming! The FED will not destroy themselves. The dollar will do just fine.
The worst is behind for the US. We will not have any sort of repeat of 2008- an "event" that causes jobloss of over 8 million like last time... NOT EVEN CLOSE, folks
Gold is a giant bubble that will begin to collapse starting next year!
And what about the debt? There's $5tr that needs rolling next year alone - where the fuck is that coming from? Ans: the printing press. The american economy is hollowed out with debt at all levels with rotting infrastructure and unmeetable demands from social security and medicare etc. Its a giant ponzi scheme and its getting ready to go bang. It can hyperinflate first or go into a depression stairstep or straight down - but the one thing this won't do is carry on for anything more than the next 5 years at which point holy hell is going to break loose in one form or another - tail events all over the place, and that is the end of the non-negotiable american way of life - permanently.
3 bagger on Zale's Jewelry off the recent lows.
Hey, Rosie, did you catch that move??
Jesus, Robo. Zale is such a POS....always
has been, always will be. Can't believe
anybody would even hold it overnight
these days.
It's like a call option on its own survival.
lol
Plus it's a parabola. Parabolas do very
mathematical things. And always.
Rosie is starting to sound like a lunatic, re:
Maybe now all the bond bears will shut their traps over this “bond-bubble” nonsense.
Because investors started to pull less than 1.1% of the 500 billion they have added to Treasuries in the last two years alone, he's calling the "bond-bubble nonsense?" What an idiot.
The guy has commitment bias. He has talked so long about going long bonds, like his brutal call a few weeks ago on the 30y, that he has just completely boxed his very wrong thesis into a corner.
This guy should be disregarded at all costs.
You don't know anything about bonds,
do you?
@thepigman
And your point sir, other than being a pointless post? If you know something, then say it.
If you have a rebuttal to my very simple thesis than let me know:
Either the economy actually improves someday and long bond investors will get torched and demand more than the historically low yields or the economy doesn't improve aside from the endless money printing to prop the entire b.s. economy and long term bond investors get torched. Either way, long term bond investors will lose.
Making money on the long side between here and there will be shear luck from here: read Rosenberg.
They're in the same bull channel
they've been in for years. Nothing has
changed.
the argument that the Fed has never saved the stock market before
espoused by Precther etc have forgot one thing
when have we had a nutter like Ben before printing trillions?
never. He makes Greenspan look tame.
I've sat on my cash listening to prechter and MIsh when we should of all listened
to Jim Sinclair and Faber
The hardcore deflationists are wrong IMHO
As much as Bubbles prints, it ain't
gonna be enough.
you dont get it.
Oh yes I do...he can't print enough
to stop what's coming.
@yabs
So you believe the bad debts will never be allowed to clear? Deflation delayed is not deflation prevented. Ponzi by another name is still a Ponzi in deed.
My onliest concern is when the $$ stops being the reserve currency. Then we are in deep.....along with the rest of the world. The transition to that is totally unmapped. A global currency will indeed throw the s...e at the fan.
Happy new year with or without Rosie.
OH MY GOD!!! ARE THE NAZI'S BACK???!!!???
I'll better buy a German dictionary for the kids...
@sudden
No Nazis, just teach them to sing
Deutschland, Deutschland über alles,
Über alles in der Welt,
Wenn es stets zu Schutz und Trutze
Brüderlich zusammenhält.
Von der Maas bis an die Memel,
Von der Etsch bis an den Belt,
|: Deutschland, Deutschland über alles,
Über alles in der Welt! :|
I don't believe I know that one.
For a Teutonic beat, try "Deutscher Girls" by Adam and the Ants.
I'll fill your bath with
The finest champagne
I'll lick your skin dry
I cherish your name
The stakes get higher
As you dress sparsely
So why did you have
To be so nasty?
Remember the curls
Of the Deutscher Girls?
A love of mine
From down on the Rhine
2. The weekly fund flow data from the ICI showed not only massive outflows, but in aggregate, retail investors withdrew a RECORD net $8.6 billion from bond funds during the week ended December 15 (on top of the $1.7 billion of outflows in the prior week). Maybe now all the bond bears will shut their traps over this “bond-bubble” nonsense.
Ummm... say what? I don't get the logic here. Bond prices crashed the week ending Dec. 15th, and there were massive outflows. How does this disprove that a bond bubble exists/existed?
Did housing prices crashing, and money outflows, in 2008 disprove that a housing bubble existed at the time? No - quite the opposite in fact, they proved that it did exist.
Whether or not it still exists is another question. Just the fact that a price drop has occurred doesn't mean we're not still in bubble. E.g. tech was very much still in a bubble in mid 2000 after the Nasdaq had fallen from 5,000 to 3,500.
RogerWilco
No I do not belive they will clear
Ben will destroy the dollar by then
He will not stop
the only thing that can and will prick the ponzi is the price of oil
oil at 100 will stop him but only for a while, then he will print again
as Faber would say , we are doomed but I think cash is more doomed than anything else
@yabs
Living in a cardboard box and wiping one's butt with $100 bills is deflation. Loss of the means to create wealth is deflation.
"Double-Dippers" and Hyper-Idioits are dead WRONG!
Nothing is coming. Bernanke DID save us from a Depression.
Predatory banks should have been jailed. Hank Paulson should have never *gifted* himself 200 million.
TARP did work despite the screams from the Tea-idiots.
Bush was the worst president in history (Obama better by a hair). TARP may be what saves him in the history books after a criminal first term
I love that you can't see this is a
depression.
soverign defaults. what is their relevance to the definition of a depression? could we consider, by chance, a series of sovereign defaults/restructurings as basis to begin the discussion of a depression? greece, ireland, portugal, hungary, belgium, spain, austria, italy, france(how are the CDS trading).
we are in the 3rd inning and the starting pitcher, Fed, for the home team is getting tired. the bullpen is warming up but they're exhausted from the long road trip, job market after offshoring of jobs, and the pitching coach is visiting the mound to make sure everything is ok(ceos and talking heads proclaiming we've left the worst behind). sure they have a lot of offense but we all know that pitching wins(sound fundamentals). if this isnt a depression then surely there will be a war to stave off this "great recession."
what a joke. drink your kool-aid and enjoy it too. unfortunately sheep-man may have it right and this may be more than an economic downtown in which case we're all F'ed and writing on a blog is futile but would you rather be carted off to work camp or be awake and fight for your survival? we all make our own choices, ignorance is bliss, but the day will come where we're faced with bigger decisions than apple or pc?
Only our overlords know where to go from here. stocks up, interest rates up, everything up, the country included, up in smoke.
Another proposed definition of depression includes two general rules: 1) a decline in real GDP exceeding 10%, or 2) a recession lasting 2 or more years.
http://en.wikipedia.org/wiki/Depression_%28economics%29#Definition
"The Great Recession" was steep, but very short lived historically speaking.
My grandfather, 94, is still alive. He tells me, "It is an insult to those that lived during the Depression to call this anything other than what it is- a Recession"
We are lucky to have a central banker that understands what he is doing and risking.
QE 3 is DOA. QE 2 is a bluff! Inflation is low
"By increasing the number of U.S. dollars in circulation, or even by credibly threatening to do so"
Ben said in 2009, "No Double-Dip". People seem to love skipping over 2009.
We'll be in this mess for 10 years. Call it
whatever you want. Your grandfather
doesn't recognize it because all our poor
are now fat slobs driving between
fast food joints and Walmart instead
of mucking out the cow barns.
..., perhaps even breaking up existing contracts for current retirees and tapping tax payers for additional revenues.
this is equivalent to political suidcide. won't work. in a democracy, everyone likes a bit of inflation. the union, the employee, the employer, the politicians...., they all do.
sarcasm aside I do sometimes wonder what it WOUlD be like wihtout Ben printing. I guess it would have been really bad. much more unemplymnet and pensions ect would have failed. Utter chaos but it would recover in time
By doing what he is doing then it may SEEM better to your grandfather gloom but if Ben keeps pushing the entire system will collapse ands not recover
he will wish he is back in the 30's again
The whole mess would have cleared in 6-12 months, at a fraction of the cost needed to bailout the banks. Instead of the brief, necessary pain, we're getting this phony recovery and signing up future taxpayers to untold misery.
Rosie forgot to mention that when the ECRI leading index is worse than -10%, which it was in July at -11%, that always leads to a recession. Oh wait, it didn't. Now the index has climbed to be flat.
What happened Rosie??? How can we not laugh at any prediction or sign of trouble in 2011 when you were so incredibly wrong on the ECRI just within a couple of months?
Either he's a lunatic or he's actually a bull in a bear suit. Sometimes you have to wonder.
Ready for a ride to 244 on AAPL,
Wanker? Buckle up. And after we
get there, I'll expect a free shoeshine.
The only reason he has been wrong in his predictions is that he relies on logic, which, unfortunately, is no longer applicable in a market so sadly manipulated. How many POMOs this past week?
Rosie forgot to mention that when the ECRI leading index is worse than -10%, which it was in July at -11%, that always leads to a recession. Oh wait, it didn't. Now the index has climbed to be flat.
What happened Rosie??? How can we not laugh at any prediction or sign of trouble in 2011 when you were so incredibly wrong on the ECRI just within a couple of months?
Either he's a lunatic or he's actually a bull in a bear suit. Sometimes you have to wonder.
Let's be honest here. We went from early Q1 where everyone (including you) was calling for a sustainable V shaped recovery to a near complete flat line and solid chance of a double dip. The Fed then comes in with heavy QE2 rumors alongside doubt about tax increases and comes through with both. The reality here is that the chances of a double dip or at least a seriously stalled economy were high enough for the Fed to come to the rescue. If you think they didn't see the same risks, read the minutes/comments and look at their actions.
My opinion is that Rosie was infinitely more right than anyone calling for the V unless they hedged that with "we'll get the V because we're going to stall and the Fed will be forced to continually juice things to keep it going". No one I know in the V camp was saying anything like that. While Rosie wasn't perfectly right, he was much closer to target.
Rosie is looking pretty ragged these days. Hang in there, bud. We had a couple of Hindenburg sitings last week. Maybe 2011 will be his year to finally shine? Or maybe it will be 2012 or 2013...?
With respect for Rosie who left Merrill swinging two months after this 22 month +88% SPX so far move began, calling it a suckers rally, here is a casual repudiation of DR’s ten points:
http://www.businessinsider.com/henry-blodget-merrills-rosenberg-goes-out...
1. Consensus bulls after 22 months of an up market neither surprising nor counter-predictive. The market can remain irrational longer than we can remain solvent or sane if we are short
2. ICI but a sample of market behaviour these days with ETFs, ETNs, Futures and Options off to the races, long, strong and not wrong
3. 56.8% Investors Intelligence bulls on 14 Dec 2010 less than 2007, 2004, 2001 and 1999 highs over 60% suggest we may have higher longer to go
http://www.investorsintelligence.com/x/advisors_sentiment.html
4. Historical market analogs work until they inevitably fail, as we saw with last August’s Hindenburg Omens and Merrill Chief Investment Strategist Stan Salvigsen’s market pessimism in a rising market that gave him another employer and a fatal heart attack in 1996 at Comstock Partners at 53
http://www.nytimes.com/1996/09/08/nyregion/stanley-salvigsen-market-anal...
5. Low dividend yields because of the 2008 market panic were surpassed by current trailing earnings yields of 6.9% that dwarf Ten or 30 year Treasury alternatives. Wait until more companies beside F, GE, MSFT and 60 others raise dividends with S&P500 profits up 47% this year over last year so far
6. The Dow:Gold chart is interesting to be sure, showing a -85% decline in the Dow versus Gold. (Mr Buffett would have done four times better in hindsight keeping his silver like Mr Gates with his PAAS.0) Yet a 2:1 or 1:1 Gold to Dow ratio does not compel anything as noted in point 4. History is fuill of pitchers with perfect records that retired broke or broken
7. Bob Farrell lost our confidence in 1982 selling the start of the biggest stock market rally in history. In fact the NYHL is at new three year highs along with the NYAD
http://stockcharts.com/freecharts/gallery.html?$NYHL
http://stockcharts.com/freecharts/gallery.html?$NYAD
8. The Shiller 23 P/E ratio is a ten-year moving average and these are anything but normal times. In fact, the market P/E is high at market bottoms and low at market tops as earnings trough at market bottoms when things look bleak and peak at market tops when things look Rosie so to speak. Earnings continue to grow into the Jan 2011 earnings season with TTWO +644% and DE + 365%. P/E is currently 15 with trailing earnings. With S&P earnings for 2010 up 47% so far, the P/E may go under 12 before we top
9. We are in anything but a zero inflation environment. ShadowStats calculates the current CPI at 8% using 1980 methodology. While some houses sometime somewhere may go down the Fed’s real -23% by 2015, why are the REITs up 183% since the March 2009 bottom and what was the Fed predicting in 2005 and 2007?
http://www.shadowstats.com/alternate_data/inflation-charts
http://stockcharts.com/freecharts/gallery.html?$DJR
10. We agree the next shoe to drop may be Municipals and Pensions as Meredith Whitney said on 60 Minutes, hardly understated. States and Cities were dealing with this from Mike Bloomberg in NYC, Chris Christie in New Jersey and Arnold Schwarzenegger in California and elsewhere for some time
Meanwhile, Bonds, Dollars, Gold and the SPX are targeting new highs at 178, 115, 1610 and 1590, three of them all-time highs
http://stockcharts.com/freecharts/gallery.html?s=%24usb
http://stockcharts.com/freecharts/gallery.html?s=%24usd
http://stockcharts.com/freecharts/gallery.html?s=%24gold
http://stockcharts.com/freecharts/gallery.html?s=spx
When JP Morgan was asked where the Bears’ mansions were, he said There are none
Will Rogers said Don't buy an investment if it don't go up
Maybe the corollary is don't sell something if it don't go down
We prefer to profit from the Jubilee Prosperity rather than try to explain it
Expert A says, "buy"; expert B says "sell". Both experts can marshal stats and charts to defend their position.
But, our debt - public and private - remains crushing; inflation is rapidly eating away at middle class purchasing power; retailers are being forced to offer massive discounts (I got the Mrs a $40 pair of designer jeans for $5, for instance) just to get people in to the stores; China's economy is a fraud...personally, I've never been so worried about the future of our economy than I am right now.
I'm no expert - I can just see what is going on around me; and it all looks very bad.
>We prefer to profit from the Jubilee Prosperity rather than try to explain it<
Love the biblical reference. Makes me
want to join your rabbit drive.
Anyway, it remains a secular bear market,
something you guys with sub 120 IQs
cannot comprehend.
That is, you haven't made any money
in 10 years and you won't make any
in 20, either. Get a clue.