The Recovery Thread

[Toro]

I'm not sure.

James Grant of Grant's Interest Rate Observer has been noting the truly staggering sums regarding the stimulus. According to Grant, in the 1990-91 recession, the total stimulus - fiscal deficits plus monetary easing - accounted for 2.8% of GDP. The 2001-02 recession, total stimulus was 7% of GDP, at the time the biggest stimulus ever. Today, the stimulus is a stunning 30% of GDP.

On the other hand, much of the channels that facilitated the housing bubbles - i.e. the shadow banking system - have collapsed. That makes it more difficult for liquidity to spread into asset markets.

But spread it will. The only question is by how much and what the unintended consequences will be, which will be something that no one is currently considering.

 

[Zander]

Enjoy the false optimism while you can.....I know a market TOP when I see one. AFAIC, the exit point is NOW. get yourself liquid and buy back in later. The upside is extremely limited and downside is huge....

As for GOLD, it is due for a correction. 90+% bullish sentiment.......do the math.

 

[Paulie]

Enjoy the false optimism while you can.....I know a market TOP when I see one. AFAIC, the exit point is NOW. get yourself liquid and buy back in later. The upside is extremely limited and downside is huge....

As for GOLD, it is due for a correction. 90+% bullish sentiment.......do the math.

The bullishness is because of this though Zander:

I mean, that may as well just have "BUY GOLD" rubber stamped across the graph.

Where else would you put all that liquidity? If the Fed corrected that down to its typical range before that unprecedented spike, people would probably forget who Paul Volcker even was, just for the simple fact of how crazy such a move would be.

You'd have to expect the fed to exit that precisely enough, in a manner timely enough not to cause price inflation of epic proportions, otherwise gold is the place to be. When's the last time they've ever gottn that right, even with REGULAR M-base expansion. Look at that spike!!!!!!!

The fact that the DOW saw no resistance at 10k and has closed above it twice now, tells me there's no correction worth liquidating entire equitiy positions for. The play is inflation, man. At the very least, if you simply must liquidate equities, move into commodities. Ticker DBA or RJI (enter around $6.50 for RJI). Both of those could see easy 100% if we see the inflation of 2008, which I personally believe we'll be looking back on as the good old days.

But not for a while though. Maybe late next year. Both of those tickers I mentioned have short trading ranges. Watch volume and moving averages.

I'm a bear and all, in the long term, but something about no 10k DOW resistance has me perplexed.

EDIT: I agree about a gold correction though, it's currently overbought in my opinion, at least in the short term.

 

[The Rabbi]

More doom and gloom. Yup, banking is going over the cliff:

NEW YORK – Wells Fargo & Co. says its third-quarter profit nearly doubled from a year ago although it joins other big U.S. banks in reporting higher loan losses.

The nation's fourth-largest bank says it earned $3.2 billion, or 56 cents per share, in the period ended Sept. 30. Analysts, on average, were expecting earnings of 37 cents per share.

The San Francisco-based bank says losses from bad loans climbed to $5.1 billion. Bank of America Corp., JPMorgan Chase & Co. and Citigroup Inc. have all reported higher credit losses as consumers struggle to pay off their bills.

Wells Fargo, which acquired Wachovia Corp. last fall, says it expects credit losses to peak in 2010.

The bank's stock is down in trading before the opening bell on Wall Street.

 

[Shorebreak]

during the 60's and 70's manufacturing was the driver for the economy. During the 80's it was finance and credit. During the 90's it was new technology and free trade. During the 00's it was housing and credit. Today manufacturing is dead. Credit, housing, and finance have been reigned in. And both the new technology of the internet and free trade are established. so what's going to be the next driver of the economy? identify that you will know when recovery is complete...

w.a.r.

 

[Neubarth]

during the 60's and 70's manufacturing was the driver for the economy. During the 80's it was finance and credit. During the 90's it was new technology and free trade. During the 00's it was housing and credit. Today manufacturing is dead. Credit, housing, and finance have been reigned in. And both the new technology of the internet and free trade are established. so what's going to be the next driver of the economy? identify that you will know when recovery is complete...

w.a.r.

We are still the leading manufacturing country in the world. Manufacturing will lead the way once we can effectively lower the dollar by 30 - 35% compared to the Chinese yuan

 

[Shorebreak]

during the 60's and 70's manufacturing was the driver for the economy. During the 80's it was finance and credit. During the 90's it was new technology and free trade. During the 00's it was housing and credit. Today manufacturing is dead. Credit, housing, and finance have been reigned in. And both the new technology of the internet and free trade are established. so what's going to be the next driver of the economy? identify that you will know when recovery is complete...

w.a.r.

We are still the leading manufacturing country in the world. Manufacturing will lead the way once we can effectively lower the dollar by 30 - 35% compared to the Chinese yuan

So... that answer is lowering the economic standards of working Americans?

That's what I call a conquered mentality. FYI, I was just told by Proctor & Gamble (take a look and see where they fall into the manufacturing scale) and they want me to be prepared to support their manufacturing operations in China and South America as they relocate out of this market. I have at least one Wyeth project lined up that is doing the same.

In addition, I'm working with multiple local steel fabricators who have lost 80% of their orders in the last 18 months, and have been forced to eliminate almost 80% of their employees as a result. That business has all gone overseas - and continues to go.

I have another client who is telling me that he needs me to be prepared to support new work by developing relationships with firms in India who can help me reduce my costs. In other words, that particular client is telling me that if i want to do business with him, I need to use wages from developing countries, and that some of my staff must be eliminated as a result.

I hate to burst any bubbles, but the only places where I'm seeing domestic manufacturing growth right now are in subsidized industries. Medical devices with a medicare component, clean energy initiatives that ultimately eliminate more jobs, pharma that relies upon federal and state prescription dollars, and military/gov't development and growth. In that market, Hummer was sold to China just last week.

From an economic perspective, the bottom line is that the US is being integrated into a competitive global economy. Lowest cost wins, therefore, the nation with the lowest manufacturing and living standards becomes the economic leader. I see it every day.

Unless the US government adopts a protectionist attitude towards the US economy, we will ultimately even out with rest as we strive to beat the lowest common denominator. if we do not demand protection for our own market, we will live no better than the worst of our competitors.

 

[mascale]

Who can believe that a low-income, low-standard-of-living, low-skilled population: Can at all create economic leadership on the planet?

"From an economic perspective, the bottom line is that the US is being integrated into a competitive global economy. Lowest cost wins, therefore, the nation with the lowest manufacturing and living standards becomes the economic leader. I see it every day."

Integrating the U. S. into a "competitive global economy," generally means that people with a means of prosperity will buy from people with lesser means and prosperity. Not much else can be concluded, even about the outcome for the people with the lesser means and prosperity.

"Crow, James Crow: Shaken, Not Stirred!"
(Anyone might even guess that historical information: Exists about this subject! Now, they're everywhere, and leading?!? Millions have even wondered if "The One" is even leading(?), except in Oslo!)

 

[Neubarth]

w.a.r.

We are still the leading manufacturing country in the world. Manufacturing will lead the way once we can effectively lower the dollar by 30 - 35% compared to the Chinese yuan

So... that answer is lowering the economic standards of working Americans?

That's what I call a conquered mentality. FYI, I was just told by Proctor & Gamble (take a look and see where they fall into the manufacturing scale) and they want me to be prepared to support their manufacturing operations in China and South America as they relocate out of this market. I have at least one Wyeth project lined up that is doing the same.

In addition, I'm working with multiple local steel fabricators who have lost 80% of their orders in the last 18 months, and have been forced to eliminate almost 80% of their employees as a result. That business has all gone overseas - and continues to go.

I have another client who is telling me that he needs me to be prepared to support new work by developing relationships with firms in India who can help me reduce my costs. In other words, that particular client is telling me that if i want to do business with him, I need to use wages from developing countries, and that some of my staff must be eliminated as a result.

I hate to burst any bubbles, but the only places where I'm seeing domestic manufacturing growth right now are in subsidized industries. Medical devices with a medicare component, clean energy initiatives that ultimately eliminate more jobs, pharma that relies upon federal and state prescription dollars, and military/gov't development and growth. In that market, Hummer was sold to China just last week.

From an economic perspective, the bottom line is that the US is being integrated into a competitive global economy. Lowest cost wins, therefore, the nation with the lowest manufacturing and living standards becomes the economic leader. I see it every day.

Unless the US government adopts a protectionist attitude towards the US economy, we will ultimately even out with rest as we strive to beat the lowest common denominator. if we do not demand protection for our own market, we will live no better than the worst of our competitors.

I prefer to refer to that as "slightly lowered expectations" as opposed to a "lowered standard of living for all Americans."

When we can produce product that we will buy ourselves, then we are competitive with the rest of the world.

The alternative, of course, is to create our own "economic co-prosperity sphere" in North America and cut out the rest of the world. That is commonly called protectionism.

 

[Zander]

The US Dollar is about to rally and rally strongly. The bearish sentiment on the dollar is as black as the plague at 98% bears. The last time we had this much bearishness the dollar reached new highs in a matter of months. It is more bearish against the greenback than it was for gold in 2001 when it was selling at 250/oz. The herd is always wrong. Of course that won't stop millions of lemmings from buying gold, right at the top.

 

[The Rabbi]

It's hard to see why gold would get much higher than this. The fundamentals aren't there. And gold is a very volatile commodity since there isnt much of it around.
When I hear ads for gold on the radio I am reminded of hearing ads for real estate ventures about 2-3 years ago and stock market ventures about 2 years before that.

 

[PLYMCO_PILGRIM]

The economy is still losing hundreds of thousands of jobs every month. When that stops, you'll see the bottom. We aren't there yet....

when that happens we will know the economy has been positive and solid for about 3 months.

Jobs are the last to recover and they only recover if we have successive months if not quaters of positive economic indicators such as we have seen for the last month or 2.

 

[Paulie]

It's hard to see why gold would get much higher than this. The fundamentals aren't there. And gold is a very volatile commodity since there isnt much of it around.
When I hear ads for gold on the radio I am reminded of hearing ads for real estate ventures about 2-3 years ago and stock market ventures about 2 years before that.

Gold volatile? It only moves on the value of currency, or the supply of it which typically remains rather steady YoY.

Besides the financial collapse last year when gold went down to $700, it's been trading in a rather non-volatile range for a while, considering.

It's been in the 900's for about a year, minus the panic collapse last year.

A look at the Fed's current monetary base is all one needs to see to understand why Gold is being touted by so many. It's certainly not without merit and reason.

When are you going to make a post that makes sense? I can't fucking wait.

 

[Toro]

Some good news

European property sales are up.

The change in mood is also reflected in the latest data. Investment in European commercial property surged 53% in the third quarter to €19.6 billion, from €12.8 billion in the second quarter, according to Cushman & Wakefield, the property-services group. Still, that pales in comparison to earlier years. There was €44 billion in investment in European commercial property in the first nine months of 2009, compared with €203 billion in the same period of 2007.

Commercial Market Gains Footing - WSJ.com

Caterpillar calls a bottom.

"We believe the third quarter marked the low point for Caterpillar sales and revenues in what has been the toughest recession since the 1930s," said Chairman and Chief Executive Jim Owens. "We are seeing encouraging signs that indicate a recovery may be under way."

Caterpillar's Profit Falls 53% - WSJ.com

Business spending is beginning to rise.

Big companies that sell to corporate customers are growing more bullish about their prospects for 2010, a sign that a revival of business investment could buoy the sluggish U.S. economy in coming quarters.

Reporting on results for the latest quarter, bulldozer maker Caterpillar Inc. and hydraulic-parts maker Parker Hannifin Corp. on Tuesday joined a chorus of companies that are saying the worst of the recession is past and customers are buying anew rather than simply drawing down inventories. …

Nonetheless, some firms are already seeing sales increases. Last week, Intel Corp. attributed strong third-quarter results mainly to sales of chips for laptop computers, driven in part by back-to-school sales, but Intel also is seeing healthy sales of a new line of chips for server systems that help lower electricity bills in computer rooms.

Intel Chief Executive Paul Otellini said the upturn wasn't simply the result of restocking of inventories but was part of a broader pattern of rising demand. In an interview this week, he credited consumers, who are now buying netbooks and laptops in record numbers. …

Brian Bethune, an economist at forecasting firm IHS Global Insight, estimates business spending on equipment and software rose at a 7.3% annual rate in the third quarter.

"High tech is definitely doing well and is going to come out of the gate first here in terms of positive growth," said Mr. Bethune, who expects a 12.7% increase in fourth-quarter spending on equipment and software vs. the third quarter. …

The CEO of Advanced Micro Devices Inc., Dirk Meyer, said his talks with chief information officers convince him that companies' tech purchases, which all but stopped in the recession, will resume next year. "Wallets are starting to free up," he said.

A report from the Manufacturers Alliance/MAPI released last week said "forward-looking indexes" such as annual orders are at much higher levels, indicating that manufacturing activity will increase in 2010.

Business Spending Looks Up - WSJ.com

And ...

According to Morgan Stanley, Oracle partners – which represent 60,000 enterprise software consultants – said that their business is at an inflection point and that headcount and pipeline growth is beginning.

 

[Neubarth]

It's hard to see why gold would get much higher than this. The fundamentals aren't there. And gold is a very volatile commodity since there isnt much of it around.
When I hear ads for gold on the radio I am reminded of hearing ads for real estate ventures about 2-3 years ago and stock market ventures about 2 years before that.

Gold volatile? It only moves on the value of currency, or the supply of it which typically remains rather steady YoY.

Besides the financial collapse last year when gold went down to $700, it's been trading in a rather non-volatile range for a while, considering.

It's been in the 900's for about a year, minus the panic collapse last year.

A look at the Fed's current monetary base is all one needs to see to understand why Gold is being touted by so many. It's certainly not without merit and reason.

When are you going to make a post that makes sense? I can't fucking wait.

All I know about Gold is that it is a pretty shiny yellow metal. When it is hyped like it has been for the past few years, it goes up in value. When the hype wears off it falls in value. Consequently the secret to making money in gold is buying after it has fallen and people have cut back on the hype. Sell after the hypsters have been conducting a campaign again and you feel happy with what you have made.

Remember, one thing, Gold has never kept up with the increase in Corn, wheat or Soy Beans over a twenty year period. It looks to me that Corn is a better buy, especially now.

 

[Neubarth]

Some good news

European property sales are up.....


A report from the Manufacturers Alliance/MAPI released last week said "forward-looking indexes" such as annual orders are at much higher levels, indicating that manufacturing activity will increase in 2010.
....

According to Morgan Stanley, Oracle partners – which represent 60,000 enterprise software consultants – said that their business is at an inflection point and that headcount and pipeline growth is beginning.

So essentially what you are telling us is that the opinions of people who have a vested interest in hyping the market is that the market has good cause to go up because they hope it will. Hummmmm? As an historian, I know one thing. The stock market can be hyped just like Gold is and it can move with the hype. In the final analysis, it finds common ground with the economy. Right now, the economy of the US is in the shitter, and it does not look like it is coming out for a long long time.

 

[The Rabbi]

It's hard to see why gold would get much higher than this. The fundamentals aren't there. And gold is a very volatile commodity since there isnt much of it around.
When I hear ads for gold on the radio I am reminded of hearing ads for real estate ventures about 2-3 years ago and stock market ventures about 2 years before that.

Gold volatile? It only moves on the value of currency, or the supply of it which typically remains rather steady YoY.

Besides the financial collapse last year when gold went down to $700, it's been trading in a rather non-volatile range for a while, considering.

It's been in the 900's for about a year, minus the panic collapse last year.

A look at the Fed's current monetary base is all one needs to see to understand why Gold is being touted by so many. It's certainly not without merit and reason.

When are you going to make a post that makes sense? I can't fucking wait.

All I know about Gold is that it is a pretty shiny yellow metal. When it is hyped like it has been for the past few years, it goes up in value. When the hype wears off it falls in value. Consequently the secret to making money in gold is buying after it has fallen and people have cut back on the hype. Sell after the hypsters have been conducting a campaign again and you feel happy with what you have made.

Remember, one thing, Gold has never kept up with the increase in Corn, wheat or Soy Beans over a twenty year period. It looks to me that Corn is a better buy, especially now.

Except gold behaves in certain predictable ways. High inflation is good for gold. High interest rates are bad for gold. Uncertainty is good for gold. Stability is bad for gold.
The price c.1979 was about $900 as I recall. I fell to around 250 in the 1990s and has retraced its highs of 30 years ago slowly this year.
It is subject to pretty quick swings because it is a thin market. I have been watching it for 20 years or more so have learned a thing or so about it.

 

[Paulie]

It's hard to see why gold would get much higher than this. The fundamentals aren't there. And gold is a very volatile commodity since there isnt much of it around.
When I hear ads for gold on the radio I am reminded of hearing ads for real estate ventures about 2-3 years ago and stock market ventures about 2 years before that.

Gold volatile? It only moves on the value of currency, or the supply of it which typically remains rather steady YoY.

Besides the financial collapse last year when gold went down to $700, it's been trading in a rather non-volatile range for a while, considering.

It's been in the 900's for about a year, minus the panic collapse last year.

A look at the Fed's current monetary base is all one needs to see to understand why Gold is being touted by so many. It's certainly not without merit and reason.

When are you going to make a post that makes sense? I can't fucking wait.

All I know about Gold is that it is a pretty shiny yellow metal. When it is hyped like it has been for the past few years, it goes up in value. When the hype wears off it falls in value. Consequently the secret to making money in gold is buying after it has fallen and people have cut back on the hype. Sell after the hypsters have been conducting a campaign again and you feel happy with what you have made.

Remember, one thing, Gold has never kept up with the increase in Corn, wheat or Soy Beans over a twenty year period. It looks to me that Corn is a better buy, especially now.

The volatility of a security of any type should never be the product of "hypesters".

If someone is stocking up on gold, for instance, simply because a bunch of cheesy infomercials are touting it, then you DESERVE to lose to whatever volatility arises from such.

You buy and sell on fundamentals and/or technicals. Not TV or radio commercials, or your local jewelry dealer putting out signs that say "HIGHEST AMOUNT PAID FOR GOLD AND SILVER!!!!"

Those are just marketing ploys. They should have zero to do with the buying or selling of any security position.

 

[Paulie]

Gold volatile? It only moves on the value of currency, or the supply of it which typically remains rather steady YoY.

Besides the financial collapse last year when gold went down to $700, it's been trading in a rather non-volatile range for a while, considering.

It's been in the 900's for about a year, minus the panic collapse last year.

A look at the Fed's current monetary base is all one needs to see to understand why Gold is being touted by so many. It's certainly not without merit and reason.

When are you going to make a post that makes sense? I can't fucking wait.

All I know about Gold is that it is a pretty shiny yellow metal. When it is hyped like it has been for the past few years, it goes up in value. When the hype wears off it falls in value. Consequently the secret to making money in gold is buying after it has fallen and people have cut back on the hype. Sell after the hypsters have been conducting a campaign again and you feel happy with what you have made.

Remember, one thing, Gold has never kept up with the increase in Corn, wheat or Soy Beans over a twenty year period. It looks to me that Corn is a better buy, especially now.

Except gold behaves in certain predictable ways. High inflation is good for gold. High interest rates are bad for gold. Uncertainty is good for gold. Stability is bad for gold.
The price c.1979 was about $900 as I recall. I fell to around 250 in the 1990s and has retraced its highs of 30 years ago slowly this year.
It is subject to pretty quick swings because it is a thin market. I have been watching it for 20 years or more so have learned a thing or so about it.

Neubarth, don't listen to this moron. He's giving you time frames of DECADES of price changes of gold. Gold moves as currency moves.

He apparently thinks a "quick swing" is 30 years. In over a year now, gold has not moved much from its $900 trading range. That's not even close to being considered "volatile".

Gold's volatility has EVERYTHING to do with monetary policy. And that's pretty much it. If currency is devalued, gold value increases. And vice versa. There's almost ALWAYS a prior indication to give an investor a reason to move around in his gold position. And that's Fed monetary policy. A rate change can dictate gold's price faster than anything else in existence.

Some people just hate precious metals and love to give excuses for why they should never be played by the average investor. I suspect Rabbi here is one of those people. He reminds me a lot of Zoomie1980, another poster here who hates gold.

 

[Valerie]

I keep thinking of the old adage, BUY LOW - SELL HIGH


The dollar is at an all-time LOW and gold is at an all-time HIGH.




How low can we go? THAT is the question.