Lorne points us to this comparison between the 1929 Dow and the 2000 Nasdaq, overlays some fib retracements, and wonders if history isn’t repeating itself:
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click for ginormous chart
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history repeat

Category: Markets, Technical Analysis

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

72 Responses to “History Repeats?”

  1. bmoseley says:

    we can find lots of historical fits. but few actually point to the future

  2. Bruce N Tennessee says:

    http://markets.usatoday.com/custom/usatoday-com/html-story.asp?markets=DOMESTIC&guid=%7B4B10CA24%2D19F1%2D4030%2D9F71%2DFD46D4533C1D%7D&loc=interstitialskip

    U.S. stock market set for shift as investor sentiment falls

    NEW YORK (MarketWatch) — After spiking above the 50 mark two weeks ago, an index of investor sentiment has dropped sharply in what analysts say is among the signals currently forecasting a turn in the U.S. stock market.

    “Signals are flashing that currencies, commodities and equities are all about to turn. There are too many signals across too many assets to ignore,” said T.J. Marta, drawing attention to the American Association of Individual Investors survey’s surge above 50 two weeks and subsequent fallback.

    On Monday, led by energy and materials shares, the major U.S. stock indexes all headed lower. Stocks, though, remained poised for monthly gains. At 10:50 a.m. Eastern time, the Dow Jones Industrial Average [$INDU] was down 71.42 points, or 0.8%, at 9,472.78. The S&P 500 Index [$SPX] had shed 9.38 points, or 0.9%, to 1,019.55, while the Nasdaq Composite [COMP] was off 19.49 points, or 1%, at 2,009.28.

    The AAII survey, which measures the percentage of individual investors who are bullish, bearish and neutral on the stock market over the coming six months, last week saw bullish sentiment falling to 34%, beneath the long-term average of 38.9%; neutral sentiment fell to 17.5%, below the long-term average of 31.1%; and bearish sentiment rose to 48.5%, above the long-term average of 30%.

    The three previous occasions on which the index behaved in this fashion, the S&P 500 corrected, as it did in early 2007; peaked, as in October 2007; or saw a bear-market rally fail, sas was the case in May 2008, Marta said.

  3. cvienne says:

    @Amen Ra

    I don’t know much about the 3LB system, but if crude closes down here, wouldn’t that be a 3lb on the “monthly” chart? (monthly closes of May, June, July)?

    And doesn’t it signal a major trend reversal when you get a 3LB on a MONTHLY close basis?

  4. leftback says:

    Hope this isn’t 1939, or World War IV is about to break out. Looks like we retrace half the Green Shoots move down from here towards the Leftback Lows™. IF we don’t have a War, the retracement would presumably be deeper.

    Oil is trading punk and even traded WITH the US peso this morning, instead of against it. That’s what I would call a trend reversal. Reversals happen when the fundamentals outweigh factors like momentum and currency hedging.

    At some point in the not so distant future those who mocked LB’s short position in crude will be forced not only to eat humble pie but also to drink a large quantity of refined gasoline, heating oil and low sulfur diesel.

  5. Onlooker from Troy says:

    LOL Barry, you just can’t resist these can you? :) I’ll admit that these chart comparisons are interesting to examine. As long as you keep all things in perspective.

  6. dead hobo says:

    As far as financial problems go, there were crashes in the 1030s, 1970s 1980s and 2000′s.

    Each of the first 3 graph out quite differently. All they have in common is a deep dive followed by an upturn from a bottom. But the important point is that all three graphs are different.

    Why should the current downturn look anything like any of the preceding three? None of them look anything like the other. Why should this one look like any of the earlier ones? It doesn’t make any sense that they should.

    So, tell me, anyone … Since none of the preceding three crashes graph out like any other one, why should this one graph out any other crash? Of course, nobody will answer me because they can’t.

  7. dead hobo says:

    Of course, the next crash will be promoted as one that should match one of the preceding 4. It couldn’t possible as unique as the preceding ones were from each other. For some reason that is incomprehensible to most thinking people, the event of the moment is never unique and must look like one that happened before … please don’t notice that all preceding events appear to be unique. This one is different.

  8. manhattanguy says:

    “Hope this isn’t 1939, or World War IV is about to break out. Looks like we retrace half the Green Shoots move down from here towards the Leftback Lows™. IF we don’t have a War, the retracement would presumably be deeper.”

    You mean WW3? Yes it would happen between U.S and China on the issue of debt and resources.

  9. cvienne says:

    Even if the order books for 2010 for some of these tech exporting companies look like solid enough to tread water, if the dollar picks up strength (on the back of a commodity unwind), the profits ain’t gonna look so good come billing time…

  10. cvienne says:

    @manhattanguy

    Re: resources

    Here’s a link I was saving for linkfest, but I’ll toss it in here…

    As hybrid cars gobble rare metals, shortage looms
    http://news.yahoo.com/s/nm/20090831/india_nm/india420934

  11. leftback says:

    Comparing crashes does indeed help to pass the trading day.. crude is going down to $67-68 this week.

  12. leftback says:

    LB assumes that the “War of Terror” already constitutes WW3…

  13. leftback says:

    Oil longs are getting flushed. As soon as the dollar turns upwards, gold bugs may follow.

    A nice smackdown today: Mish v Jim Sinclair. No need to take sides necessarily, just enjoy the arguments:
    http://globaleconomicanalysis.blogspot.com/2009/08/countdown-to-dollar-implosion-madness.html

    LB would point out that in 2008 Mish scored at least a technical KO over the gold bugs. The arguments about domestic buyers replacing foreign demand for Treasuries are I believe well formulated and based on Japan.

  14. wally says:

    “Why should the current downturn look anything like any of the preceding three?”

    The answer depends on how much you believe markets are driven by human psychological responses. You may regard markets as fact-driven or ‘reality’ driven, or you may think that economic variables are influence by how people think and react. The common deep-drop followed by a bounce argues for at least some over-reaction and correction due to emotion; even the length of the correction time seems similar.

  15. Pool Shark says:

    LB,

    Mish likes gold. He seems to hold to the theory that it performs better during deflations than inflations:

    http://globaleconomicanalysis.blogspot.com/2007/02/is-gold-inflation-hedge.html

  16. mathman says:

    @cvienne: here’s one from May 2007 NewScientist on the looming shortages

    http://www.newscientist.com/article/mg19426051.200-earths-natural-wealth-an-audit.html

  17. zyzy says:

    @bmoseley
    well said.

  18. leftback says:

    @Pool Shark: Correct. Mish doesn’t like Loony Toons forecasts for the gold market to go super nova tomorrow.

  19. cvienne says:

    @mathman

    … and yet nat gas is abundant (& domestic) if Obama would care to use his noggin.

  20. donna says:

    No no, history doesn’t repeat, it rhymes…

  21. Eric Davis says:

    These charts are a joke. wasnt’ there one last week that shows we had 20% still to go!(ignoring the y axis on the graph).

    all you have are 2 charts that are similar within an error of (+/- 300 days)…. Enough to get a truck through!

    good enough for government work and Economic Science I guess!

  22. dead hobo says:

    leftback Says:
    August 31st, 2009 at 12:44 pm

    Comparing crashes does indeed help to pass the trading day.. crude is going down to $67-68 this week.

    reply:
    ————-
    Maybe. Regardless of the China announcement, oil can still go back to prior levels and further if daytraders and morons decide that school supply layaways and empty malls are a prelude to the return of the consumer. In fact, with a couple of good headlines, S&P1100 would be here lickety split. Sorry, without structural fixes in the markets, this dip won’t amount to much unless it includes a Minsky moment.

  23. Steve Barry says:

    Dennis Kneale is against outlawing texting while driving…he says only 4 people have died from it. The other CNBC analysts are outraged,…he just said “get a bigger car”.

    His days on the air are numbered.

  24. Pool Shark says:

    I hear ya LB.

    He’s probably just getting sick of Sinclair’s constant alarm-raising.

    I think Sinclair has acurately predicted eighteen of the last two crashes. ;-)

  25. The Curmudgeon says:

    I think the nat gas performance relative to other energy commodities illustrates perfectly two forces affecting world markets v. national markets. Nat gas is basically a domestic market. Yes, it can be shipped from or to overseas markets, but at great cost and inefficiencies, with an infrastructure only beginning to come on line. It is best transportable through domestic pipelines from domestic sources. The collapse in its price illustrates domestic demand destruction across the board, as utilities need less of it for electricity production, and ethanol producers find making a living even with a 50 cent per gallon subsidy is very hard.

    Oil, however, is the penultimate internationally traded commodity. It’s retrace to about $70 after last year’s run-up and then fall illustrates world sentiment about the US’ massive reflation strategy, flooding the world with dollars, but also illustrates that the US is becoming a relatively less important buyer. Domestic and international demand for oil has declined 3-5% from its peak in 2007, mostly due to declines in US demand, but newly-industrializing economies like Chindia will continue to need more and more of it to keep growing.

  26. dead hobo says:

    The Curmudgeon Says:
    August 31st, 2009 at 1:46 pm

    … mostly due to declines in US demand, but newly-industrializing economies like Chindia will continue to need more and more of it to keep growing.

    reply:
    ————–
    I used to think like you. In fact, peak oil might even be true and here. There’s no way to know. Long only funds that have turned oil into an asset class and attracted oceans of money to bid up the price create such distortions that the true value of oil is unknown and unknowable. Thus, price is not an efficient way to allocate investment capital, only gaming capital.

    Nat gas has been in glut for a while, but price is only now beginning to reflect it. There’s nothing to prevent capital from flowing back into nat gas and making the price explode again. For commodities, there’s little connection between price and demand, only price and demand for higher prices, providing excessive liquidity is available to provide support.

  27. karen says:

    Haven’t gotten thru the entire Mish rebuttal to Sinclair, but may I point out that Mish’s “return to normalcy” on the Foreign Sales/Purchase chart means 30 year interest rates at 9-10% and the 10 year at 8 and +%. Ha ha on calling that a return to normalcy in this decade… i would call it crushing.

    Further, I must state that while I have been turned off by Sinclair’s alarmist and conspiratorial views, I would rather step aside than trade against him.

  28. investorinpa says:

    Don’t worry, now that Spider-Man and Hannah Montana are now dating, all is well in the universe!

  29. cvienne says:

    History Repeating

    http://www.youtube.com/watch?v=sTUIHK7gHRE
    Propellerheads (feat. Shirley Bassey)

  30. beaufou says:

    I don’t see this as a repeat of anything past, it was my sentiment that the system was mortally wounded months ago and I haven’t noticed any improvement that would suggest otherwise.
    Maybe I’m just crazy.

  31. jturner says:

    Good article on the Fed’s efforts to fight deflation, the consequences of such actions, and the potential impact on the gold price – http://www.goldalert.com

  32. leftback says:

    @Karen: No Treasury market collapse, because it would be disastrous, and there are mechanisms to prevent it (trigger equity and commodity crash to stimulate flight to safety; then talk up “green shoots”; rinse, repeat).

  33. dead hobo says:

    karen Says:
    August 31st, 2009 at 2:02 pm

    … the Foreign Sales/Purchase chart means 30 year interest rates at 9-10% and the 10 year at 8 and +%. Ha ha on calling that a return to normalcy in this decade

    reply:
    ———–
    Maybe next year, as soon as the Fed stops buying Agencies from foreign govts with the provision they buy UST debt with the proceeds. Then, vavoom. Of course, the Fed is probably using extortion to make it happen. If the govts won’t swap, the Agency debt will become virtually worthless. So, they have to decide between a bad deal and a worse deal.

  34. ben22 says:

    Thought people might want to read this short clip:

    http://www.quote.com/news/story.action?id=RTT908311351001084

    No fear at all of deflation yet I see it everywhere.

  35. dead hobo says:

    In fact, if I were China, I would be using this window to do exactly what they said they are doing … using reserves to buy things. Such as US hard assets. aka buying America. Their reserves won’t be worth crap in a year or two so why not slip in and buy things at fire-sale prices while Ben the Bubble is still keeping the price of their reserves at useful levels.

  36. manhattanguy says:

    US is technically insolvent – Fed is trying to deflect an economic catastrophe with all means available to them. Blowing the new bubble is the fastest and least expensive short term. This movie will have a disastrous climax.

  37. dead hobo says:

    manhattanguy Says:
    August 31st, 2009 at 2:20 pm

    US is technically insolvent – Fed is trying to deflect an economic catastrophe with all means available to them. Blowing the new bubble is the fastest and least expensive short term. This movie will have a disastrous climax.

    reply:
    ————-
    Yeah, but think of the buying opportunity for bank stocks when the Fed tries to fix the next implosion with a better bubble. Cha Ching!!!

  38. karen says:

    Ben, pls, i couldn’t get beyond the first sentence! “.. economists strongly agree with current monetary policy and have a favorable view of the current stance of fiscal policy.” Take your pick:

    An economist is an expert who will know tomorrow why the things he predicted yesterday didn’t happen today.

    An economist is a man who knows a hundred ways of making love but doesn’t know any women.

  39. AmenRa says:

    @cvienne

    I haven’t looked at a 3LB (or TLB) for oil (continuous contract) yet. I did take a look at CBOE Oil Index (monthly) and it reversed up last month but it isn’t trending.

  40. rootless_cosmopolitan says:

    I am already at WW V or WW VI. Have lost count with all the world wars, which supposedly started during the last decade. Some of them are still going on. Overlapping world wars then.

    As for the chart. Trying to find similarities in patterns w/o economic context doesn’t make much sense. (Auto-)suggestion will make you see what you are looking for somewhere. Some people even saw Satan’s face in the smoke of the burning twin towers.

    More interesting, what is the economic reality? And what does it mean for the markets? The economic reality is that the total debt in US, i.e. private, companies and public debt all together, amounts to about 52 trillion US-dollars. That is a debt to US GDP ratio of about 375% and the biggest debt bubble maybe in history, larger than the one that deflated during the Great Depression. Society is split between net debtors and net creditors. Let’s assume 75% of the total debt are owed by net debtors, the remaining 25% are owed by net creditors. I don’t know the exact fraction here, it just seems a plausible assumption to me. Thus about 39 trillion US-dollars are owed by net debtors. Assuming an average rate of interest of 5% to be paid on this debt by the net debtors to the net creditors, makes necessary interest payments of about 1,95 trillion US-dollars a year. This interest is to be paid from the income of the net debtors. With an US GDP of about 14 trillion US-dollars a year, the nominal US-GDP of US would have to increase by almost 14% a year to generate sufficient additional income to only pay the interest on all the debt, assuming all the additional income is going to the net debtors and the capital stock is supposed to be not decreased and other expenditures not cut. If the net debtors got only 50% of the additional yearly income, the GDP would have to increase by almost 28% a year, so that the net debtors to be able just to pay the interest. I don’t see any realistic expectation for such an increase a year in nominal US GDP for the next decades. Or we get a very high inflation scenario through which debt is just devalued. That wouldn’t be so healthy for society either, would it?

    Any other solution in sight other than debt deflation, which will happen by massive defaulting of net debtors, writing off the debt and massive losses on the side of the net creditors? I admit the calculation above is just a coarse estimate, but it should illustrate that the believe it would be possible to dissolve the debt bubble just by GDP growth and diverting a larger fraction of income to pay of the debt is delusional.

    So far, governments have worked hard against threatening debt deflation by moving debt from private balance sheets to government’s balance sheets, and tried to stimulate the economy worldwide, apparently with some success, by creating even more debt. But this just means postponing the inevitable, since even governments can’t increase their debt infinitely, although, as for US, it’s still room left until US public debt will have reached Japan’s level of almost 200% relative to GDP. Debt has still to be serviced and the current debt level already isn’t sustainable anymore according to my estimate above. When debt deflation really starts and when the day comes that government can’t prevent it anymore, then things could become really ugly and the recent recession could be nothing in comparison.

    Thus, what will the consequences of such a debt deflation scenario be for the markets? I don’t need to try to find similar patterns in some historic charts to get a very gloomy picture of what is coming, probably. I am just not able to put out an exact timing here. What will happen to the markets isn’t so important anyway. More important is what will happen to society in this scenario.

    I would very welcome it, if anyone were able to show me, where my above logic goes wrong.

    rc

  41. Pat G. says:

    @ LB (2:13 pm) “(trigger equity and commodity crash to stimulate flight to safety; then talk up “green shoots”; rinse, repeat).”

    It works until it no longer does.

  42. I-Man says:

    @ karen:

    Good one!

    “An economist is a man who knows a hundred ways of making love but doesn’t know any women.”
    -The Mistress of the Stick

  43. leftback says:

    @ben: I think the short answer is that there is indeed deflation – in everything that is not being artificially propped up by the USG. There was a news piece on the lobster industry recently. Lobsters and natural gas prices are steadily declining and are approaching multi-year lows, and both are examples of assets that are hard to store, and which are not currently the object of dollar hedging strategies. In addition, there are no bailouts for these industries at present. So here and there, we can see windows into what “could” be happening to prices without interference. The fine wine and fine art market is also down, even though both are examples of assets that can be stored.

    Looks like the next trip on the D-train™ may be beginning soon. All aboard!

  44. cvienne says:

    @Amen Ra

    Take a look at it after the close…

    I think it’s sitting right on (or below) a 3lb on the monthly (and today is the last day of the month).

  45. karen says:

    Interesting news item and am wondering if it’s designed to make us bullish on crude oil ??

    2:31 PM ET 8/31/09 | Dow Jones
    OTTAWA (AFP)–PetroChina Co. (0857.HK) has agreed to purchase a 60% stake in two oil sands projects in western Canada for US$1.7 billion, Athabasca Oil Sands Corp. said Monday.

    The MacKay River and Dover oil sands projects owned by Athabasca are in northeast Alberta province. They have been independently assessed to hold about 5 billion barrels of bitumen, a heavy form of crude.

    “Oil sands projects are very capital-intensive, long-term investments and difficult to fully finance in the traditional equity market,” said Athabasca Oil Chmn. Bill Gallacher.

    Athabasca Oil “therefore decided to look for joint venture partners,” and a joint venture with PetroChina, “one of the world’s largest energy companies, can ensure that the MacKay River and Dover projects will be developed in timely manner,” Gallacher said.

  46. karen says:

    With regard to PetroChina, at least they aren’t buying at the top; but i would not call this the bottom either…

  47. I-Man says:

    And on deflation…

    At the beach last week I was awestruck by the amount of ocean front property for sale… both from realty companies (with overlevered rental portfolios) and individuals (with vacation homes gone underwater.)

    What is most striking to me is that its all about liquidity… many of these bomb beach houses were 2nd or 3rd vacation homes that people are selling because they need “liquid” assets… not because they want to sell their beach house. The realty companies are just screwed because they overlevered.

    Deflation number one is so obvious we’ve all forgotten about it… Real Estate.

  48. dead hobo says:

    karen Says:
    August 31st, 2009 at 2:36 pm

    Interesting news item and am wondering if it’s designed to make us bullish on crude oil ??

    reply:
    ————
    No. China paid less than $3 per barrel (using your numbers above), plus refining costs. Even assuming massive refining costs, this still implies a present value for oil of much less than today’s prices. They stole it. The implication is that the Canadians are desperate for cash or the price of oil today is extremely overvalued relative to the estimate of future prices once the price system is fixed. On top of that, they took US$.

  49. karen says:

    dead hobo, perhaps i’m mistaken but i thot crude needed to be above $80 barrel for a currently producing oil sands project to break even.

  50. dead hobo says:

    Excuse me, my arithmetic skills are poor.

    $1.7b / (.6 x 5billion) = 57 cents per barrel plus refining costs.

    I suppose this is why calculators exist.

  51. dead hobo says:

    karen Says:
    August 31st, 2009 at 2:46 pm

    dead hobo, perhaps i’m mistaken but i thot crude needed to be above $80 barrel for a currently producing oil sands project to break even.

    reply:
    ————
    I heard the can make a decent profit at $50.

  52. Dogfish says:

    Late to the party, but LB, WW3 was the Cold War, WW4 is already in progress as the WoT.

  53. ben22 says:

    @karen

    I’ll go with option number 2 then. : )

    I also thought the article was a joke but this is the current consensus.

    @LB,

    Indeed re your 2:34. See the most recent post put up here regarding the volume in the garbage dumps and where it could be coming from. My guess, the credit deflation is far far worse than any regular person yet realizes but they still see it in real time at those comps and this is preparation for the next D-Train trip. While everyone awaits the coming inflation and focuses on not fighting the Fed they are preparing for the exact opposite it seems.

    From the post:

    If you were the government and you saw that these institutions were on the verge of a major fail, with billions of taxpayer dollars at risk, I’m not sure you’d announce that to the world. Nor, at this point politically, could you ask for yet another bailout package. But you would only pour money into those stocks at a frantic pace (capable of detection) if you perceived a dire need for the capital.

  54. karen says:

    I-Man, the real “real estate” price crash has yet to happen, imo.. the inventory of homes for sale in the higher ranges far exceeds the required incomes to purchase them. Moreover, many have seen the error of their ways in purchasing multiple homes.. seriously, the overhead is overwhelming… which only adds to the inventory, whether they sell or return to lender.

  55. karen says:

    Headlines for sore eyes:

    – Crude ends bellow $70 for first time in two weeks
    3:03 PM ET | Marketwatch
    – Crude falls 3.8% to end at $69.96 a barrel

    Ben, I knew you view, believe me : )

  56. Mannwich says:

    @karen & I-Man: I thought that number was closer to 70 (where we are now), but I may be mistaken.

  57. Mannwich says:

    @karen: I’ve had similar thoughts recently regarding the higher end. The higher end HAS to come down A LOT eventually. That’s precisely what the feds are trying to avoid – - pain for the royals (themselves and their friends), but it won’t work. There simply aren’t enough incomes to support them, without inflating another credit bubble, of course.

  58. Mannwich says:

    An guess what happens to lower to middle end priced homes when the higher end totally crashes? I think everyone here knows the answer to that one.

  59. zyzy says:

    “crude falls”… “CHINDIA !!” “… “FED is …. ( censored) ” . “.. after financial system is fixed” .. “Home prices totally crash ..” ..

    oh, c’mn ppl – world wont’ stop because of chindia/russia/us/canada or africa. people still need to eat and drink and drive their cars and send kinds to more and more expensive schools. nothing will be “fixed” and houses won’t get to $100 a dozen..

    the rich will get new bussinesses/car/yachts and the middle class will work harder and have less money to spend on anything but simple needs.

    that’s all . question is when ? timing is the key…

    I’m off to get a beer. no. tequila shot… or two.. yeah. 2 shots … Monday indeed.

  60. ben22 says:

    totally agree with you all on the higher end needing to come down. But hey, Tiny Tim thinks he can sell his high end home for more than he paid at the RE peak.

    I’m sure you all get this but do people really know what it takes to service a 500k mortgage, or a house of that size on an annual basis. You better be making some serious scratch to feel “safe” in that position.

    Looking at call options on ZSL today.

  61. hopeImwrong says:

    Ben22 re 3:05 post – I don’t understand how driving up the publicly traded stock price will benefit the underlying company unless they have a huge cache of their own shares (which I doubt).

  62. ben22 says:

    @hope,

    Constantnormal answered that in the thread above this, I thought he/she did a decent job in describing a few ways this is more than it seems:

    From constant:

    It works like this: corporations use shelf-registered stock sales to the Fed/Treasury/designated agent of the Fedreasury to bring money in-house. The use of shelf-registered stock sales means it can occur somewhat quietly. Also, they can sell shares held by the companies involved. Either way, it amounts to shares of worthless stock being exchanged for cash.

    Another way is for the Fedreasury to buy shares on the open market, pumping up the prices of the shares and boosting the balance sheet valuations of any shares held by the companies in question. But that way is a bit indirect and not nearly as efficient as buying the shares directly from the companies.

  63. ben22 says:

    hope,

    I think it’s just a guess right now is the bottom line, but I’m thinking this is more than Johnny Retail getting a few shares of AIG common recently.

  64. leftback says:

    Just covered some shorts in oil and drillers. Turnaround Tuesday ahead, pending home sales and a possibly benign ADP statistic means that there is every possibility of another rip upwards this week.

    3.39 on the 10-year. Hmm….. overnight TBT?

  65. Onlooker from Troy says:

    “”It will not be too bad this year. Both China and America are addressing bubbles by creating more bubbles and we’re just taking advantage of that. So we can’t lose,” he said.”
    Lou Jiwei, the chairman of the $298 billion China Investment Corp sovereign wealth fund.

    http://www.reuters.com/article/ousiv/idUSTRE57S0D420090829

    So, it’s bubbles is it? And the China sovereign wealth fund is doing their part in the blowing.

  66. DiggidyDan says:

    I’d venture to say we’re about done here for this rally. . . I know i said 1062, yet over the weekend, i went to the beach with some friends from HS. We got pretty tanked, and one of my old friends started spouting off about economics and politics (he usually does this to me because I have a different viewpoint from him politically, without realizing my ideological views are much the same, I just voted differently in a lesser of two evils scenario). He proceeded to blame all the bailouts and the recession on Obama, even in the face of me retorting actual facts that it began before the election even happened and was, in fact begun under the previous republican regime and Hank Paulson, and tried to explain that it is impossible to have such an environment solely be produced by one man in the executive branch. He also tell me that the recession is not ending, but in fact will get worse next year. I asked why, but he had no way to articulate the reasons really, just that it is going to get worse. Then told us that we should not listen to people like Cramer on TV and should listen to a local AM radio talk show and check out his website. I was like, no offense, but I think I have a better grasp on the situation and frequent more intelligent news sources than those you mentioned, naming TBP, kirkreport, abnormalreturns, zerohedge on him. Dunning-Krueger effect . . . the guy still seemed to think his limited knowledge is the gospel and more relevant than factual research and evidence. The fact that a person of such nature has doubts and thinks the thing is on for another crash was the best signal I could have had that the end of the rally is near. Watch out after labor day.

  67. karen, dh, y’all–

    see: http://clusty.com/search?input-form=clusty-simple&v%3Asources=webplus&query=Athabasca+water+pollution

    wait until, even, more Canadians understand the negative Ecological impacts of that Financial boondoggle– aka “Oil Sands”.

    wait for chants of: “Don’t let China do to Athabasca, what China has done to China!”

    PetroChina may have been better off using those U$D to augment the soft coal they burn in their crudely polluting electricity generation facilities.. at least, that way could count on some spark, as an ROI..

  68. AmenRa says:

    @cvienne

    I didn’t have historical WTI prices. Had to look them up. Looking at the monthly closes oil is still in a downtrend according to 3LB (or TLB) with a range of 39.16 to 76.65. So a monthly close higher than 76.65 will reverse the trend.

  69. AmenRa says:

    @cvienne

    Found a better source of WTI Crude prices. The 3LB reversed in July and Aug made the 2nd monthly gain. So the current range is 69.96 to 41.68. Another monthly close higher and it will be trending. Here’s a chart of the 3LB:

    http://www.charthub.com/images/2009/09/01/WTI_Crude_Oil.png

  70. farmera1 says:

    rootless_cosmopolitan

    Good post, it would be interesting to see real research put into your analysis. The 75/25% (net debtors/net creditors) ratio is interesting but I wonder if it is correct. I would suspect the ratio is even higher maybe 80/20 or more depending how it is defined.

    I’ve watched with wonder as this massive debt bubble grew for years. As a percent of GDP total debt in this country has grown exponentially for years or decades, and we all “know” what happens when things grow exponentially. The previous peak was reached in the early thirties at some 190%. Now at 350%-375% we are in new territory.

    http://www.bullandbearwise.com/DebtOverGDPChart.asp

    For years I’ve thought we were in an excessive debt situation (despite what Greenspan said in his book, not to worry a lot of developed countries are worse). I would define excessive as debt that could never be paid off. There would seem
    to be only two ways out:

    1) DEFLATION, as in the Great Depression.

    2) INFLATION, which has been tried before with usually very ugly outcomes especially to the governments that try it.

    It would seem the government has opted for a stealthy inflation policy. I personally doubt they can pull this off without disrupting the economy entirely. Then you add the looming unfunded liabilities in Medicare (including the $11 or so trillion from the prescription program), SS to a much smaller extent etc,
    things don’t look good IMHO.

    To me this growth in debt vs GDP (especially for consumption) is the underlying cause of the current economic situation. There are no easy answers, it is going to be painful.

  71. [...] The same blog sports a chart comparing the current market trajectory to the 1929-39 crash period. The Big Picture blog finds a similar parallel. [...]