I’ve been in meetings all afternoon, but BAM! The market sure liked Q3 GDP data. Stocks rallied right back to resistance at 1068-75 (se chart below).
• Stocks in U.S., Commodities Rally as GDP Signals `Waterloo of the Bears’
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Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data, ability to repeat discredited memes, and lack of respect for scientific knowledge. Also, be sure to create straw men and argue against things I have neither said nor even implied. Any irrelevancies you can mention will also be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.
Faced with the choice between changing one's mind and proving that there is no need to do so, almost everyone gets busy on the proof. —John Kenneth Galbraith
Knowing that the vote over the weekend in Greece was really a referendum on Euro membership, a majority of the Greek Parliament said yes to staying. European Finance Ministers meet again on Wednesday to solidify the 2nd bailout package for Greece at the same time hopefully a deal is consummated between Greece and its creditors this week. The Greek 14.5b euro bond that matures on March 20th is up by 2 pts. The optimism that all will be completed and contained AGAIN to Greece has yields lower in Portugal, Spain and Italy. The iTraxx Financial Index is also narrower by...
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October 29th, 2009 at 4:39 pm
Despite it being old news
October 29th, 2009 at 4:40 pm
America’s Grossly Distorted Product
If the Obama administration was managing a company, it might have hoped the latest gross domestic product numbers would be greeted with cries of “great quarter, guys!”
At least the stock-market obliged, rising on better-than-expected GDP data Thursday morning. But then bulls have grown used to looking to Washington, D.C., for inspiration. Zero rates and stimulus programs boost economic data as well as nudge money towards riskier assets.
Fully 2.2 percentage points of the third quarter’s 3.5% growth figure related to vehicle purchases and residential construction, both juiced by government support. Federal spending added 0.6% to growth.
If these GDP data really were company earnings, they would be what analysts euphemistically call “low quality.” Investors buying into the market on these figures are ignoring weekly unemployment claims data that came in above 500,000 again on the same day.
The wider danger is that all these short-term fixes leave the economy dangerously addicted to taxpayer-funded steroids. The circularity in the housing market, whereby Washington provides tax-breaks to first-time buyers, guarantees most of the mortgages written, and then buys most of those, beggars belief — and suggests a worrying case of amnesia following the bursting of the housing bubble.
Another idea that has been floated is to give tax-breaks to firms encouraging them to hire. Yet with quarterly earnings besting forecasts so far, it doesn’t look like firms are exactly short of funds to pay workers. What they lack is a clear sense that the economy is on a stable footing. Distorting the cost of money, durable goods demand and l
October 29th, 2009 at 4:42 pm
So Barry, do you take back your warning of last week?
October 29th, 2009 at 4:44 pm
All the tax breaks and stimulus in the world just doesn’t fix the demand issue. Companies aren’t going to hire people just for a tax break. There has to be underlying demand, and that is low, and might continue to be so for a long time. Perhaps generationally. I just don’t see where it can come from if unemployment continues to grow, or at least, doesn’t shrink!
What a mess, born of excess and bad habits, no less.
October 29th, 2009 at 5:02 pm
“…Millennial Crisis – The Fourth Turning Has Arrived
A Crisis arises in response to sudden threats that previously would have been ignored or deferred, but which are now perceived as dire. Great worldly perils boil off the clutter and complexity of life, leaving behind one simple imperative: The society must prevail. This requires a solid public consensus, aggressive institutions, and personal sacrifice. Strauss & Howe – The Fourth Turning
The current Crisis era began with the housing bubble that peaked in 2005 and the subsequent collapse of the financial system in 2008. The government response to a Crisis caused by thirty years of debt accumulation by consumers has been to spectacularly increase the amount of debt in the financial system. Since consumers won’t spend and banks won’t lend, the Federal Government and the Federal Reserve have decided to spend our grandchildren’s money today to prop up a corrupt evil empire. As White House lackeys and Federal Reserve shysters parade on TV day after day assuring the American public that the crisis is over and crowing that their wisdom prevented a 2nd Great Depression, the truth is they have planted the seeds of a far worse Crisis. The government actions taken so far, along with legislation chugging along in Congress will add $13 trillion to the National Debt by 2019. That would put the National Debt at $25 trillion in 2019. If interest rates are 5% in 2019, the interest on the debt would be $1.25 trillion per year. Realistically, interest rates would likely by 10% or higher in 2019. At that rate, the interest bill would be $2.5 trillion per year. The United States generated $2.1 trillion of total revenue in 2009….”
“…As a gang of marauding starving homeless former Goldman Sachs investment bankers beat Mr. Krugman about the head with his Nobel Prize, he can try to explain to them how another trillion of stimulus would have done the trick. Every decision made by our “leaders” in the last year has been a short-term solution without worrying about future consequences. This has been the politicians’ response for decades. Amazingly, the people that inhabit the halls of Washington and live in the ivory towers of academia actually believe that debt will cure a disaster created by too much debt.”
“The fact that an opinion has been widely held is no evidence whatever that it is not utterly absurd; indeed in view of the silliness of the majority of mankind, a widespread belief is more likely to be foolish than sensible.” Bertrand Russell
http://www.financialsense.com/editorials/quinn/2009/1021.html
October 29th, 2009 at 5:37 pm
`Waterloo of the Bears’
____________
So, in this analogy, are the bears Bonaparte or Wellington?
October 29th, 2009 at 5:49 pm
Liam Denning-
i like what you’re saying dude- but do you think Wall Street gives a shit?
if it takes the USG/Fed to make the markets go up- and if the USG is the GDP-
they couldn’t care less- however-
all this spending is giving corporate welfare a bad name-
long live money for Wall Street- fuck main street- who give’s a shit about them
October 29th, 2009 at 6:01 pm
@Mark E Hoffer
Nice post but that link is a little creepy.
October 29th, 2009 at 6:06 pm
Hoffer, I clicked on financialsense.com, interesting, one thing I agree on is the cycles, and the math, especially when it comes to the 1% number and the number who have influence and why. I often say, “hate motivates”, lol, hate to say it, yet, people do not change until change is forced upon them by and large…………thus my revulsion of tarp, tbtf bs, etc……….they would not allow society to expereince the pain that would force them to change, ie, do the right thing however you want to say it……….
I’m going to have to order the book and read it, what is funny was I was going to post up some research I had done over the last 4 years in reference to the last 100 years. I arrived at it by actually going out and talking too people, lol, it is about believes, what did those people in those 25 year time frames believe in?
1900-1925—Find a job and work. Save money because you might lose that job or hate that job and need your savings to tide you over until you find another ones. Jobs are not guaranteed. This sense of saving for future crisis was passed down from the immigrants who, well, faced a crisis, saved money and came to amreica.
1925-1950—Get a Good Job. Now a good job was one with long term security. The first big coroprations, unions etc……….One might call this moving away from Upton Sinclairs, The Jungle, a book about immigrants who worked in the chicago slaughterhouses near the turn of the century….( hope i got author name correct, been 30 years since read)………these “good jobs” had clean working conditions, safe working conditions, and a chance of promotion and more money in the future.
1950-1975—Get an Education, ie, College Degree and then get a good job. The good job folks saw that managment had a better life because of one thing and one thing only, a ticket to get in the door with a college degree. Management had higher income, better chance for advancement, and more security and displyaed no real apptitude or work ethic other than a college degree.
1975-2000—Get a Higher Education, ie, the right college, or law school or mba, etc., specialization era, and Get a High Paying Job. The educated college folks see the people up the ladder have one thing and one thing only a Higher Prized Ticked to get thru another door, and the disparity in income is huge, for no more apptitude displayed in skill, other than Political.
I have conversed with many young men and women in there 20;s in the last 4 years. They have taken on huge debt beyond imagination to acquire the ticket, and have discovered High Paying Jobs are elusive. Yes, of course they are there, yet, for some reason they have assumed the come without years of service for some reason. The debt that they now have and a decent job are good yet they do not see opportunity ahead of them. They see the people up on the ladder and shake there heads, they do not like what they see, fore they are far more perceptive and worldly then previous generations and the hypocracy screams out at them and they are, to put in simple terms, confused.
October 29th, 2009 at 6:57 pm
Regarding the change in the younger generations outlook on jobs Torrie-Amos posted about.
I read your post and thought about myself and 12 close friends that I grew up with. Myself and 2 others didn’t finish college and we have 2 of the best 4 jobs of the whole group. Many of my friends that finished college are either working at dead end jobs a long ways below their skill level or decided to enter master’s programs because they couldn’t find decent jobs.
Part of the problem finding jobs is the current economic environment, but I’d bet that quite a few business’ are starting to up more emphasis on actual job skills and experience than a diploma.
October 29th, 2009 at 7:01 pm
““The fourth quarter will be the Waterloo of the bears,” said E. William Stone, who oversees $102 billion as chief investment strategist at PNC Wealth Management in Philadelphia. “We are in economic recovery both in the U.S. and globally, so you will eventually see revenue growth because you are seeing the recovery hold.”
-Where do they come up with this stuff?? “…so you will eventually see revenue growth because you are seeing the recovery hold.” Huh? Exactly how are we seeing the “recovery hold?” One positive, stimulus driven GDP number and this guy makes this type of proclamation? Crazy.
Everyone keeps saying there are still too many bears out there expecting a major pull back. I disagree. Short interest is extremely low and morons like this guy keep telling us how great it is.
October 29th, 2009 at 7:31 pm
Harrywanger….Holy cow….so now you are bearish??
I am not sure how people over here can dismiss the possibility of reflation…..even mish keeps singing the same tune all the time.
i am not saying that it is a done deal….but i would give atleast 15% chance that FED/USG/ROW will inflate their way out of this debt driven deflation…
it wont be back to normal(<5% unemployment and gdp=+3% to + 4%)….but this maybe the start of recovery, things getting better as time goes by.
but maybe it is hard to imagine anything outside one's belief.
October 29th, 2009 at 7:54 pm
@BR: Your site is hanging badly right now.
The culprit as once before seems to be cdn.eyewonder.com.
Let’s hear it for mashups.
@MEH: Nice post. Have known that book for some time. Not sure about the fourth turning soon. From what I see of today’s young people, we’re not there yet.
Maybe the next gen. After the wheels have truly come off.
October 29th, 2009 at 9:11 pm
Nice article. We do need confirmation of the move higher though.
The pre-announcement on Wednesday that GDP may be lower was really a trap for the bears, to get them to sell, so that they buy it cheap and bring up on Thursday.
That is why I believe it is better to just watch where the tape moves and avoid all the news bites that all they do is confuse a trader.
Using timing signals can help an investor profit both from the upside and the downside of the market. I get mine at http://invetrics.com
October 29th, 2009 at 9:24 pm
So Fed spending and stimuli added 2.8 of the 3.5%
Fully 2.2 percentage points of the third quarter’s 3.5% growth figure related to vehicle purchases and residential construction, both juiced by government support. Federal spending added 0.6% to growth.
October 29th, 2009 at 9:29 pm
jc-
it’s all good news-
next up- 5 yr plans
October 30th, 2009 at 6:33 am
GDP report had ZERO to do with the casino moving up. economic data if anyone hasn’t noticed has continued to deteriorate. as a matter of fact consumer confidence at 47 is a number near recession lows and near depression levels. the long only guys and appetite for risk is still out there with a vengeance as our group of goons continue to believe spending will lead the banana republic out of the depression we are in. good luck. i see the casino retesting and trading to new lows.
October 30th, 2009 at 10:04 am
torrie,
re: Cycles, it’s interesting, also, mirrors http://clusty.com/search?input-form=clusty-simple&v%3Asources=webplus&query=Kondratieff
Past that, Quinn has his own ideas. One, of which, ‘Peak Oil’, that, from Geo-Physical standpoint, is a tremendous Hoax.
All in all, a good thought piece..
~~
alfred e,
as you can see, here http://www.amazon.com/s/ref=nb_ss_1_11?url=search-alias%3Dstripbooks&field-keywords=the+fourth+turning&sprefix=The+Fourth+ that book has been out for over a decade, with others penned before, and after..
also, see http://clusty.com/search?input-form=clusty-simple&v%3Asources=webplus&query=5+year+plan+United+States there are, actually, nothing new here, in the US — much to the surprise of many..
~~
Its Me ,
hard to respond to generic ‘creepiness’, could mean any, of a number of, thing(s)..