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Weekly Chartology
Goldman's S&P forecast summary:
Our top-down EPS forecasts of $76 and $90 for 2010 and 2011 reflect +33% and +20% growth, respectively. Our pre-provision and write-down EPS forecasts are $81 for 2010 and $91 for 2011. Bottom-up consensus forecasts a 38% increase in 2010 to $79, and a 20% increase in 2011 to $95.
This ain't nothing. Later we will show how squid now anticipates an S&P of 2,000 courtesy of the madman's printers.
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Hmmm...
Higher profits, plus higher dividends, plus higher unemployment, equals higher productivity - leading to (everyone) higher unemployment...
I don't think that's accurate and being cynical doesn't help. I think higher dividends is an educated business decision to attract investor cash. Check it out more and more companies are adding dividends or increasing thier existing payouts (Connoco Phillips and Starbucks are examples); the reason seems to be more people are looking for steady cash streams as they enter retirement and not capital gains since taxes will be rising.
Unemployment is high, but admittedly it's in areas that were overgrown to begin with! Admittedly this was accross the board but the number of unemployed real estate agents in CA will be much higher than West Virginia coal miners as a percentage and will probably stay that way. I think unemployment is a new structural change and will pretty much remain as it is now, I can't see more layoffs coming since there don't seem to be any black swans left.
Back to the GS paper, I'm surprised at their currency forecasts/commodity price projections, they seem to be a little uhm like guesswork... I think they should have an asterik that reads 'all price projections are relative to a static dollar (81.0)' because that's really the only way those numbers make any sense.
No offense but this is one of the most ridiculous comments on the forum: "I can't see more layoffs coming since there don't seem to be any black swans left."
If you could see them coming, they wouldn't be black swans now would they?
not true. the difference between a black swan and something impossible is that a black swan has a probability of occurring regardless of how minute. because of the last crisis virtually every doomsday scenario has been played out commercial real estate, sovereign debt crisis, residential real estate part 2, RMB floats etc. and enough capital x2 has been put in place to ward off them off. Still unemployed? Extend the benefits!
There aren't any more black swans because the everyone is looking for one. In the last year we've had three countries default with virtually no effect on any markets but their own, that is absolutely unbelievable but not totally improbable if you assumed you'd have two or three times as many that were going to default and thus put the necessary programs in place to ward off any ill effects.
Additionally if you see a black swan coming does that make it any less of a black swan? Lets assume you knew about the real estate bubble in 07, does that make it or any of the subsequent reactions any less of a black swan event?
virtually every doomsday scenario, has been played out? not even close
Okay outline one that is totally new and I'll concede.
China dumping their Treasury holdings, California defaulting, Italy electing to leave the Euro, Saudi being revealed to have deliberately overstated oil reserves, massive earthquake hitting Tokyo....
but everyone is aware of those risks. I'll grant you an earthquake hitting Tokyo might be news but nothing else is.
The Chinese wouldn't dump their holdings because the market would sell too, putting china in a position where they couldn't sell fast enough and then the market would be saturated. At best they won't buy new treasuries and allow the existing ones to expire and collect on them. Cal. would get bailed out before default, besides they have plenty of cost cutting measures they could go through first (pensions, govt wages, etc.) all of these would need to be exhausted first. Italy leave the euro? Pft. Germany would be more likely to leave the euro if one country were to, and the Germans and Italians love the fact a weaker euro helps their exports, what's the incentive to leave? Who cares if the saudis have overstated? It's proven we have tankers and tankers of oil reserves all around the world and productive capacity isn't really increasing. When I see the baltic index start to climb MoM then I'll believe there may be sufficent oil demand.
All that aside, those are things that are already out there and that are being explored. Do you think B. Gross doesn't think about the probability of a Cal. default?
Since you have convinced yourself that these things aren't going to happen, and even if they do, there will not be a meaningful impact, you clearly have nothing to worry about.
Many people felt the same about subprime...
How about North Korea starting a war or firing off a nuke, China bubble burst or China sells all its US treasuries? Would those be examples of a Black Swan?
...ZH readers become bullish on US equities...
There haven't been 3 sovereign defaults...
Iceland, Dubai and Greece is on the cusp. I guess Greece isn't fair game; you're right.
No sovereign default on Dubai as of yet....
Dividends are going to be taxed just like capital gains. Your post is full of it.
Yeah except they aren't. You're full of it and speculating on a whim is like pissing in the wind.
I appreciate the hell out of what you are saying here, but no one can avoid risk. Catastrophic risks come at random and happen to everyone and thing.
Not putting a bear hat on here (it's already soldered on). I think the best advice is to buy what is cheap, not by analytical metric, but by what others loathe. If it is loathed, then the chance of it being leveraged is low. Leverage dump by big fish is what kills, because guppies like you and me usually don't get out before they do.
Could Goldman be right this time?
When the whole country is either unemployed or working for the Government counting how many people are counting people the we will truly have reached a state of ludicouracy.
My balanced charts are at: http://www.apartofny.com/2010/03/updated-elliott-wave-count-for-sp500-3/
Look for the inevitable run-up into the quarter end print. Should be worth another 200-300 DJIA points this week.
gotta love the call on the euro at 1.45 over the next 3-6 months and crude at 92 in 3 months....nothing like talking your position.
......or talking the opposite of your position.
if only Mr. Market understood that his path is based upon consensus EPS forecasts, hah !
where does one even start with (operating) EPS forecasts ... just too rich in so many ways.
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