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Rosie On Dow 10,000 And The Stock Market
David Rosenberg: "My view is that we are still in a secular bear market...My big concern is that the market has gotten ahead of the economy. The S&P is pricing in $85 dollar of operating earnings which would be a double from where we are right now, and it usually takes four to five years to double earnings off a recession low... The market has clearly overshot the fundamentals. The government should be promoting more of a savings culture...I have a tough believing time you can destroy $14 trillion of net worth in the U.S. - right now bank lending is contracting at 15% annual rate and who is filling the void: the Fed, the FHA, Fannie, Freddie..."
Also some amusing personal anecdotes, the usual smakcdown of former ML colleague Rich Bernstein, coupled with recommendations for consumers to save, not spend (contrary to what the Fed wants you to do).
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Rosie is so right... the mathematics of this whole sham simply do not add up... no matter which shady accountant the banks, fed, and admin want to use...
FHA will implode.
They will get it past the midterms most likely
Stock values and indexes should be calculated in Euro instead of US dollar. This way, we will see how much of the increases in the stock markets are due to money printing, how much of it is market manipulation and how much is real growth.
why not gold?
Pricing it in Euros will result in the same problem as pricing it in dollars, to a relative degree. Last I checked, the Euro is also printed.
I propose you value the market using Gold instead.
http://yourquestionsyourmoney.blogs.foxbusiness.com/files/2009/10/Dow_in...
Nothing new here. Rosie's been saying this for months.
Whether Uncle Slam promotes it or not, the consumer is saving and deleveraging. Uncle Slam is doing the opposite to fill the void.
Since most non-essential consumption by individuals is based on perceived personal wealth, that $ 14 trillion in individual asset destruction will hijack earnings growth for several Japan-like years. That means a " recovery " looks like wwww for the equity markets.
Well,not in euro,but in dollar index and gold. and TD has presented graphs that show both,the dow/gold is very interesting.....
Well that's easy enough.
X 1000 to get true price.
Up about 40% from the low.
http://stockcharts.com/h-sc/ui?s=$SPX:$XEU&p=W&yr=3&mn=0&dy=0&id=p53990078539
Euro economies start to hurt badly above 1.50 EURUSD. Watch for the Dax breakdown. The markets are rattling crude towards $80, a direct tax on US consumer spending, and the euro towards 1.50, which kills eurozone manufacturing. All bullish for stocks of course lol!
Plus if Chris Whalen is right on the banks then all those on Wall Street are in for big shock next year.
$5B a day buying MBS. Once more, WTF don't people understand about that kind of liquidity?
I still say the S&P will hit 1200 by the end of the year, 2000 by the end of next year, and gold will be at $2000, oil $200 (if you can even buy oil with USD by that point).
Again. What happens to the consumer at $200 oil please? It's 70% of GDP.
i don't think it constitutes for 70% of the GDP anymore, try 62%-65%
Ok what happens to the consumer at $200 oil (65% of GDP)?
the same thing it happened when it hit 147$ just multiplied by 5
it will take 50% of their unemployment paycheck to gas up to go to the food pantry.
unless they have exhausted their benefits, then they simply don't count and the unemployment figures look better per the BLS.
their houses, which should have been foreclosed, will simply sit on the bank balance sheet at or close to par.
laugh of the day...bernanke telling congress to get serious and stop deficit spending. talk about the pot calling the kettle black.
More likely they will turn more to govt subsidized public transportation, like peasants do in the rest of the world.
Yeah, Bernanke has a lot of balls, I will give him that. Even though any economist worth his salt knows they guy is intentionally destroying the middle class to save the financial system, he sits up there with his holier-than-though attitude.
Again, you care about fundamentals?
How old are you? Were you not around in 1999? Serious question.
Do you remember Lycos? Webvan?
Liquidity does not care about fundamentals.
Answer the question?
Err unless I am greatly mistaken Lycos wasn't an essential and didn't have a direct impact on consumer spending. US GDP is highly dependant on consumer spending and that consumer is highly dependant on energy and the motor car.
So if as you proclaim oil hits $200. I think that would put the US into recession again, which does what to oil prices?
What do you want me to answer? What happens to the consumer?
They get poorer. As they have for the past 30 years.
Now, you tell me, what do fundamentals have to do with short term performance in the stock market?
Keep banging your head against the liquidity wall if you want, I just hope you are only losing your wealth, and not someone else's.
I give up. Not worth my time.
If you have been short oil, or gold, or equities, or bonds, or any financial asset denominated in USD in the past 6 months, you should give up trading.
Well thank you for your words of wisdom. For the record I started buying gold at $290, when everybody was chasing your liquidity driven tech rally. I still have that gold today. C'est la vie.
I agree. I'm not so sure that's a bad thing to say, by the way, since where we are now was not entirely obvious a year ago. But once QE was announced, in retrospect it makes perfect sense - kill the dollar so that within the US values appear to hold steady (with some frothy improvement in the case of equities) while decimating the dollar as between the US and other equally troubled currencies. Values in motion appear to remain constant when they are descending at roughly the same speed.
Indeed. A world of rough equivalence in a world of an fx race to the bottom with the chase for alpha meets the need for notional value stability. Values in motion are descending at roughly the same speed which is the problem See my post at How The Fed Bailed Out The World.
Excellent Ned
LOL Webvan
1 billion in VC money and a bankruptcy couple of months later
Jeff Bazos said that Webvan was the reason numero uno for him not to speed up the growth of AMZN when VCs told him he should do so.
The Central Planners pop the cork, that's what happpens.
U.S. stock market and fundamentals should not be in the same sentence. With few exceptions, stock certificates hardly have more intrinsic value than a las vegas gambling chip. I may be cynical, but even if one were to assume that financial statements reflect the objective financial state of an enterprise (a proposition that is highly debatable considering the high motivation of the big 4 accounting firms to "please" the customer and the daunting complexity of today's multinational corporation), still I cannot perceive "investing" in the stock market as anything else but a gambling proposition. I exalt those who can consistently turn in profits "trading" or "investing." I am honestly astonished by Wall Street's ability to maintain the interest of the masses in "investing" and "trading." On the other hand I guess it is an easy sell considering that most people think that they are smarter than the next guy and that they can make it. Sorry for the rant but the whole thing is utterly interesting to me from a psychological perspective. It is also fascinating that people came up with all kinds of theories and models of explaining market prices from the basic to the uberly obscure and highly scientific. Marvelous stuff. Good day to you all. I enjoy reading this forum. It gives me a feeling that I have an "insight." It is great.
Rosie is a buffoon who missed the bull markety and now does not have a courage to say i was wrong. Instead he comes to cnbc and every time uses a new way to "alter" his stance. He became "less bearish", he was about to turn bullish,...
Grow up, you missed the rally.
I wouldn't call him a buffoon, but he definitely does seem to be waivering in his beliefs.
I respect a guy like David Tice a lot more, if you have seen him lately, he sticks to his guns, calling for the S&P at 400 or whatever, saying this is a big bear market rally, etc.
Whether or not you agree with him, you have to respect him for having conviction. Rosie is a bit of a waffler.
convictions are worthless. it is knowledge and the power to addapt what matters. ask Darwin if you don't believe me.
I wasn't talking about worth, I was talking about respecting someone.
As I said, Tice may be wrong, but I respect him for sticking to his view.
Rosie waffles: "I am less bearish now". huh? After the market is up? If you believe the market is disconnected from fundamentals, you should be more bearish the higher it goes.
at first hand what you wrote in your last paragraph makes pretty good sense, but on the other, it doesn't, but again in this case it does. so +10 for you Sir.
the idiot maker rally - Roubini, Rosenberg etc...
http://www.businessinsider.com/the-idiot-maker-rally-2009-10#david-rosen...
Bernanke has given a whole new meaning to the term "juicing".
I would like to pat the posters on the back here who have been verbally telling folks to pull their money away from the big banks who received TARP funding. Its working!!!
I heard from my niece this morning that BofA went into her work place last week trying to get the employees to open accounts at their bank. She told me all her co-workers laughed about it!!!
Good for them. Screw BAC.
Hmm, that is interesting, maybe that will work.
IMHO it is the only chance to save the country. It is a slim chance at best, but if followed by enough people, it could succeed.
The govts response would be to put govt money on deposit with the TBTF banks, as has been done throughout history, but that has never proven to work for long.
So BB wants people to increase their saving rate"“The United States must increase its national saving rate,” . and I would agree with him. But how are they going to do that and he is constantly destroying the dollar?or does he mean that people should funnel their saving in to the stock market?and in that case,is he going to make sure(in writing in front congress) that MM don't open up (zeta) company tomorrow $10 lower,like what happened to RIMM lately?. Words has to be accompanied by actions. What exactly this statements mean if people's savings has gone down by 15%(in real value) since Mar?none of the participant in the conference challenged him on that?Nobody cares to ask him:how can people increase their savings(which they are already doing incidentally)if they have to constntly look behind their shoulders at the dollar?
Good comment. Bernanke says people should save, but gives them no incentive to save. Where is the disconnect?
He is a liar. he doesn't want people to save. He is pushing them out of saving, because he knows the US economy needs people to go further and further into debt. But he can't say that, so he says one thing and does another.
Just like saying he is not monetizing the debt on the very same day he buys UST.
The guy is a sociopathic liar.
Baghdad Ben, indeed. I smell an SNL skit.
Anyone have any idea how he arbitrarily comes up with "priced for $85 in earnings"?
I think its reported operating earnings discounted at the YTM for AAA corporates if memory serves me....
http://research.stlouisfed.org/fred2/graph/?chart_type=line&s[1][id]=CNCF&s[1][transformation]=log
According to St.Louis Fed corporate net cash flow never broke the uptrend. Is this calculation accurate or is this data subjective? For business owners it is and always will be cash flows that matter, not earnings. Are cash flows about to take a dramatic turn down? Why haven't they done so already?
Markets have been pumped since March. Massive promotion by way of countless "financial" networks, "business news" channels, presidential speeches and so on have achieved the greatest pumping of stocks of all time.
Forget pumping only a few penny stocks. This pump the Fed, GS (and others) and the government have orchestrated was fabulously spectacular.
Ok, so we have the pump. Question is when does the dump start? When do the players (propagandists, promoters, market makers etc) dump their shares in high quantities?
PUMP & DUMP go together like icing and angel food cake.