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RCP is not fairly described as 'independent'. RCP is a marvelous site for junkies of the political realm, but to claim no bais is a serious stretch. We all have biases and to think that a pending alteration in balance influence won't effect finance is profoundly ignorant. Of course these mid terms are significant!
Uncertainty is the greatest certainty at this time. I personally believe that the 'recovery' has not occured due to capital having no idea where to profitably flow. The unknown outcome of this mid term is HUGE. Capital will adjust once a clear map is available.
We do not live in a free market. The government does indeed determine the direction of markets and therefore the composition of the government is a critical factor in determining allocation.
This all seems like gist for an AYN RAND novel.
I'm going to go spend some time reading/loving my intellectual lover.
For more, see 99er Charts in the Market Commentary Forum.
Updated GOLD monthly chart:
No choice left to deal with purchaser price increases but further auto-cannibalization...UE 12% ho!
At least none of our precious, precious CEOs will be affected by their cuts, in fact, they may get bonuses for all that costly production they helped freeze and purge.
One less pesky factory using energy and needing its toilets cleaned. Snickersnack.
"A weak US Dollar (viewed by most clients as a secular trend) would help margins but only 30% of aggregate revenues for S&P 500 is sourced abroad and for the median firm the ratio is just 25%."
This is an very important point. There are many bulls talking about overseas earnings, implying that global growth and demand will allow the S&P500 to continue to raise earnings. But the thing is, they confuse earnings from overseas operations (i.e. including manufacturing in low cost places that then gets shipped and sold into the domestic market, where most of the profits are kept in offshore for tax purposes), and genuine external demand. Therefore, the weaker Dollar being good for earnings is a bit of a myth. It raises input costs for domestic goods. In theory, the cheaper Dollar would make US industry more competitive, but you can't turn things around that quickly, especially if you closed the factories ten years ago and shipped the machines to China and Mexico.
In the near term, The Fed's apparent desire to kill the Dollar is all about saving the banks and also making investors so worried about what the Fed is going to do - think of it as "Mad Dog" central banking - that it reduces equity redemptions. The damage that would be wrought by a collapse in equity prices is terrifying the bankers and politicians, so this is how they are trying to fight it.
I think too the pundits are underestimating just how weak this economy is. Banks/brokers are about to embark on one of the grandest head count reductions in the Country's history, this will add grossly to unemployment not including other industries that are now slashing head count...big pharma has also just jumped on the wagon. Truth is, without jobs, there's no recovery. Period!
I just wonder how long the Gubberment can keep this thing propped up? This must be obama's market, the market of hope
One lesson I have learned from all this is that a recession really takes shape and gets worse because of all the power players in the world starting to make moves to not only secure, but grow their fortunes, during the whole process. In this case, the actions of the Fed really served to make the recession last longer, due to the fact that they were funnelling so much money to Wall Street so those guys could get a backdoor windfall while all the rest of us are trying to figure out how to stop from going broke. All the pols, same story... trying to position themselves right.. this is a money making event for them. Hedge fund guys add to their billions off of 'recessions' like this last one.
I don't understand how margins can continue to improve when raw material prices are sprinting higher. Copper is at a yearly high. Oil is up 7% IN A WEEK. The CRB is up about 10% from when the market started sniffing out QE2 in August. How can higher commodity costs get get passed on when GDP is running at less than 2% growth and unemployment is bumping its head against 10%? I just don't see it.
My guess is margins have peaked for the cycle, but the dunderheads are going to chase stocks higher into year end anyway.
...and a portion of the margin improvement seen so far came from delaying repair and maintenance, which is a major budget item for basic manufacturing and mining companies.Repair and maintenance will eventually have to be done.
If the Bush tax cuts don't get extended, what do you think about stocks selling off so they don't get posted next year?
This year's short-term gains
vs sunset'd short-term gains
vs long-term gains
Walmart last week was mentioned as having had to raise prices. Obviously the vast majority of what they and other retailers sell is imported. A weaker USD will impact retailers the hardest. The few remaining U.S. steel producers will benefit as will the ag industry and many of its suppliers...ditto U.S. based mining companies.
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