Optimism on recovery? Think again.

[DamnYankee]

Optimism about a recovery starting to fizzle
Observers expect stocks’ rally to end as economic reality starts to set in
By John W. Schoen
Senior producer
msnbc.com
updated 18 minutes ago

What happened to all the optimism?

Less than a week ago, many people were celebrating the beginning of the recovery. The Federal Reserve itself claimed the economy is “leveling out.”

Now some investors and market watchers say the stock market may have overestimated the prospects for an economic rebound — and share prices could be due for a bigger pullback after a 50 percent surge since March.

Optimism about a recovery starting to fizzle - Eye on the Economy- msnbc.com

 

[elvis]

Optimism about a recovery starting to fizzle
Observers expect stocks’ rally to end as economic reality starts to set in
By John W. Schoen
Senior producer
msnbc.com
updated 18 minutes ago

What happened to all the optimism?

Less than a week ago, many people were celebrating the beginning of the recovery. The Federal Reserve itself claimed the economy is “leveling out.”

Now some investors and market watchers say the stock market may have overestimated the prospects for an economic rebound — and share prices could be due for a bigger pullback after a 50 percent surge since March.

Optimism about a recovery starting to fizzle - Eye on the Economy- msnbc.com

must be the Obama effect.

 

[JakeStarkey]

Dems will successfully blame the Pubs and Elvis-stain, and sweep the elections in 2010.

 

[elvis]

Dems will successfully blame the Pubs and Elvis-stain, and sweep the elections in 2010.

whatever you say, Ringo. Whatever you say. can't very well be the dems' fault when they run the whole fucking show, can it, obamabot?

 

[PLYMCO_PILGRIM]

Optimism about a recovery starting to fizzle
Observers expect stocks’ rally to end as economic reality starts to set in
By John W. Schoen
Senior producer
msnbc.com
updated 18 minutes ago

What happened to all the optimism?

Less than a week ago, many people were celebrating the beginning of the recovery. The Federal Reserve itself claimed the economy is “leveling out.”

Now some investors and market watchers say the stock market may have overestimated the prospects for an economic rebound — and share prices could be due for a bigger pullback after a 50 percent surge since March.

Optimism about a recovery starting to fizzle - Eye on the Economy- msnbc.com

I HOPE they are wrong but I cant CHANGE the financial facts. This recovery is temporary because it was caused by artificial and temporary govt spending.

But who knows maybe it will work THIS time. I know the method has failed countless other nations and civilizations but maybe somehow we will be the exception to the rule.

I can hope

 

[DamnYankee]

Dems will successfully blame the Pubs and Elvis-stain, and sweep the elections in 2010.

You mean the way the party-in-power did in 2008?

 

[Centrism'sVoice]

Dems will successfully blame the Pubs and Elvis-stain, and sweep the elections in 2010.

You mean the way the party-in-power did in 2008?

Why not? The party in power in 2002 did.

 

[DamnYankee]

Dems will successfully blame the Pubs and Elvis-stain, and sweep the elections in 2010.

You mean the way the party-in-power did in 2008?

Why not? The party in power in 2002 did.

Had to dig that far back, huh?

 

[Annie]

I hate when I see things like this:

Is The Worst Really Over? - Yahoo! Finance

Is The Worst Really Over?

By Simon Maierhofer
On Monday August 17, 2009, 12:04 pm EDT
According to recent surveys, the majority of investors looking for light at the end of the tunnel are seeing a very bright glow. Is it really light pointing the way out, or the beacon of another collision bound train?

Wall Street in general certainly believes to have seen the light. Goldman Sachs chief strategies Abby Joseph Cohen is convinced that a new bull market has begun. Nobel Prize-winning economist Paul Krugman says that the world has avoided a second recession.

On July 23rd, the Wall Street Journal reported that 'The economy has hit bottom.' Furthermore, 90% of economists, according to a survey by Blue Chip Economic Indicators, believe that the recession had ended last quarter (more about the significance of this in a moment).

After-the-fact prophets

The astute investor will wonder where Mrs. Cohen, Mr. Krugman, 90% of the economists, and all the other Wall Street gurus were in March when the alleged new bull market actually begun. Shouldn't it be possible to identify a bull market a bit earlier than a 50% rally and five months after the fact.

The sobering reality is that around the March lows, Wall Street and all its followers were indulging themselves in self pity and doomsday behavior. On March 5th, the American Association of Individual Investors survey reported the most pessimistic sentiment reading in over 20 years. 70.27% of all investors were bearish, with only 18.92% being bullish.

Around the same time, on March 2nd, the ETF Profit Strategy Newsletter issued a Trend Change Alert. The alert prepared investors for 'the most powerful rally since the October 2007 all-time highs' with gains expected to exceed 30-40%.

ETFs recommended at the time ranged from plain vanilla broad market index ETFs like the S&P 500 SPDRs (NYSEArca: SPY - News) and Dow Jones (NYSEArca: DIA - News), to sector ETFs such as the Financial Select Sector SPDRs (NYSEArca: XLF - News) and their leveraged cousins, Ultra Financial ProShares (NYSEArca: UYG - News).

Prior to the Trend Change Alert, in early January, the newsletter recommended loading up on short ETFs, such as the UltraShort S&P 500 ProShares (NYSEArca: SDS - News), UltraShort Financial ProShares (NYSEArca: SKF - News) and others, with a target of Dow 6,700.

Is this rally out of sync with reality?

While after-the-fact prophets have jumped on the rally bandwagon, the economy continues to lag....

...Scary valuation metrics

In general, P/E ratios are based on forward-looking or projected earnings, which often reflects wishful thinking. The P/E ratio, based on recently reported earnings, available on Standard and Poor's website, is a whopping 143.95. This is not a typo!

The earnings for S&P 500 constituent companies have declined over 95%, since peaking in Q3 2007. If current estimates hold, Q3 2009 will see the first ever 12-month period during which S&P 500 earnings are negative.

P/E ratios are one of the simplest yet most accurate valuation metrics around. A historic analysis of major market bottoms show that there has not been a single prior bear market that bottomed without P/E ratios (and dividend yields) reaching rock bottom levels. In fact, those levels can even be used to calculate a target range for the ultimate market bottom.

Just as the human body is not healthy unless it runs at 98.6 degrees, the stock market is not healthy unless P/E ratios and dividend yields reach those trigger levels. Needless to say, a P/E ratio of 143.95 (even P/E of 15) is far removed from levels indicative of a bottom.

The Great Depression all over?

The economy and stock market are forming more and more parallels with the Great Depression. In fact, no other bear market, aside from the Great Depression, compares with the bull market of the late 2000s. Even the current 50% rally parallels the bear market rally from 1929/1930. This rally was followed by another 70%+ drop.

In 1929, a few months before the meltdown started, the Harvard Economic Society turned from bearish to bullish. In 1930, right at the top of the first major counter trend rally which lifted the Dow by nearly 50%, the Society confirmed its bullish outlook. A few days later, the Great Depression reasserted itself. Today's optimistic economists will soon learn the same lesson as their Great Depression predecessors; don't get caught up by unfounded hype.

Based on investors extreme optimism, the banks' troubles, the economy's problems, reliable fundamental indicators, parallels with the Great Depression, and many other facts and indicators, the light at the end of the tunnel will turn out to be a train, ready to steamroll your portfolio.

Nave investors during the Great Depression kept buying into decoy rallies, only to see more and more of their wealth evaporate. While the stock market will sink to new lows, perhaps even dwarf the Great Depression, a continued losing streak doesn't have to be the fate of your portfolio.

The September issue of the ETF Profit Strategy Newsletter contains a detailed analysis of the parallels between the Great Depression and today, P/E ratios and dividend yields, along with corresponding ETF profit strategies. Also included are practical tips to survive and thrive in the coming years and target ranges for a market top and the ultimate market bottom.

Yes, there is light at the end of the tunnel! Insightful investors realize that the light is attached to the 'Short Line' railway. Will your portfolio be on board to profit in a down market?

 

[Centrism'sVoice]

You mean the way the party-in-power did in 2008?

Why not? The party in power in 2002 did.

Had to dig that far back, huh?

That's a blink of an eye.

 

[DamnYankee]

I hate when I see things like this:

Is The Worst Really Over? - Yahoo! Finance

Is The Worst Really Over?

By Simon Maierhofer
On Monday August 17, 2009, 12:04 pm EDT
According to recent surveys, the majority of investors looking for light at the end of the tunnel are seeing a very bright glow. Is it really light pointing the way out, or the beacon of another collision bound train?

Wall Street in general certainly believes to have seen the light. Goldman Sachs chief strategies Abby Joseph Cohen is convinced that a new bull market has begun. Nobel Prize-winning economist Paul Krugman says that the world has avoided a second recession.

On July 23rd, the Wall Street Journal reported that 'The economy has hit bottom.' Furthermore, 90% of economists, according to a survey by Blue Chip Economic Indicators, believe that the recession had ended last quarter (more about the significance of this in a moment).

After-the-fact prophets

The astute investor will wonder where Mrs. Cohen, Mr. Krugman, 90% of the economists, and all the other Wall Street gurus were in March when the alleged new bull market actually begun. Shouldn't it be possible to identify a bull market a bit earlier than a 50% rally and five months after the fact.

The sobering reality is that around the March lows, Wall Street and all its followers were indulging themselves in self pity and doomsday behavior. On March 5th, the American Association of Individual Investors survey reported the most pessimistic sentiment reading in over 20 years. 70.27% of all investors were bearish, with only 18.92% being bullish.

Around the same time, on March 2nd, the ETF Profit Strategy Newsletter issued a Trend Change Alert. The alert prepared investors for 'the most powerful rally since the October 2007 all-time highs' with gains expected to exceed 30-40%.

ETFs recommended at the time ranged from plain vanilla broad market index ETFs like the S&P 500 SPDRs (NYSEArca: SPY - News) and Dow Jones (NYSEArca: DIA - News), to sector ETFs such as the Financial Select Sector SPDRs (NYSEArca: XLF - News) and their leveraged cousins, Ultra Financial ProShares (NYSEArca: UYG - News).

Prior to the Trend Change Alert, in early January, the newsletter recommended loading up on short ETFs, such as the UltraShort S&P 500 ProShares (NYSEArca: SDS - News), UltraShort Financial ProShares (NYSEArca: SKF - News) and others, with a target of Dow 6,700.

Is this rally out of sync with reality?

While after-the-fact prophets have jumped on the rally bandwagon, the economy continues to lag....

...Scary valuation metrics

In general, P/E ratios are based on forward-looking or projected earnings, which often reflects wishful thinking. The P/E ratio, based on recently reported earnings, available on Standard and Poor's website, is a whopping 143.95. This is not a typo!

The earnings for S&P 500 constituent companies have declined over 95%, since peaking in Q3 2007. If current estimates hold, Q3 2009 will see the first ever 12-month period during which S&P 500 earnings are negative.

P/E ratios are one of the simplest yet most accurate valuation metrics around. A historic analysis of major market bottoms show that there has not been a single prior bear market that bottomed without P/E ratios (and dividend yields) reaching rock bottom levels. In fact, those levels can even be used to calculate a target range for the ultimate market bottom.

Just as the human body is not healthy unless it runs at 98.6 degrees, the stock market is not healthy unless P/E ratios and dividend yields reach those trigger levels. Needless to say, a P/E ratio of 143.95 (even P/E of 15) is far removed from levels indicative of a bottom.

The Great Depression all over?

The economy and stock market are forming more and more parallels with the Great Depression. In fact, no other bear market, aside from the Great Depression, compares with the bull market of the late 2000s. Even the current 50% rally parallels the bear market rally from 1929/1930. This rally was followed by another 70%+ drop.

In 1929, a few months before the meltdown started, the Harvard Economic Society turned from bearish to bullish. In 1930, right at the top of the first major counter trend rally which lifted the Dow by nearly 50%, the Society confirmed its bullish outlook. A few days later, the Great Depression reasserted itself. Today's optimistic economists will soon learn the same lesson as their Great Depression predecessors; don't get caught up by unfounded hype.

Based on investors extreme optimism, the banks' troubles, the economy's problems, reliable fundamental indicators, parallels with the Great Depression, and many other facts and indicators, the light at the end of the tunnel will turn out to be a train, ready to steamroll your portfolio.

Nave investors during the Great Depression kept buying into decoy rallies, only to see more and more of their wealth evaporate. While the stock market will sink to new lows, perhaps even dwarf the Great Depression, a continued losing streak doesn't have to be the fate of your portfolio.

The September issue of the ETF Profit Strategy Newsletter contains a detailed analysis of the parallels between the Great Depression and today, P/E ratios and dividend yields, along with corresponding ETF profit strategies. Also included are practical tips to survive and thrive in the coming years and target ranges for a market top and the ultimate market bottom.

Yes, there is light at the end of the tunnel! Insightful investors realize that the light is attached to the 'Short Line' railway. Will your portfolio be on board to profit in a down market?

Dayum... Should give them a crystal ball...

 

[Kevin_Kennedy]

The economy can't be in a recovery considering that the underlying problems that caused the recession in the first place have been made worse by the government attempting to solve the crisis.

 

[Paulie]

This is what is almost certainly going to happen:

Since the Fed has created an enormous amount of liquidity, an artificial boom period is all but guaranteed. When all that money eventually hits the streets, there will come a period of a couple years where money is easy to come by again, and that money will be put to work somewhere like it always is, which will lead to another bubble.


The boom period won't be as fruitful as the last one, because credit won't be as easy to come by for the little people, but it will still create a comfort level and people will spend again.

But god help us when the bottom falls out of THAT one, because there's really nothing left to keep us propped up anymore.

 

[DamnYankee]

the economy can't be in a recovery considering that the underlying problems that caused the recession in the first place have been made worse by the government attempting to solve the crisis.

b-i-n-g-0