Macro Overview: Economy & Markets
It is time to take a big picture look at everything: This is a summation of everything we have discussed over the past month and quarter. Where are we in this particular cycle?
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Macro-Economy: The economic backdrop seems to be confusing quite a few people. Perhaps its the psychology of the moment. I keep hearing weak, data free analysis. Here is our 7 point overview:
1. The Economy is recovering; The recession is over: Of that, we have no doubt, as the data is clear. The free fall of 2008-09 is over, and a gradual improvement is seen across the board. Industrial manufacturing, exports, autos, retail sales, durable goods, travel all confirm that the economy is “healing.”
2. But, the recovery is “Lumpy”: — Part of the reason some people doubt the recovery story is how unevenly distributed the improvements are. Geographically, much of the country is still soft. In retail, it is pent up demand plus luxury goods. In technology, it is mobile devices and consumer products. Financial firms are taking advantage of the steep yield curve and ZIRP to arbitrage profits, as opposed to actually lending. Profits are not evenly distributed either.
3. Government spending is only part of the story: In the midst of the crisis, Credit froze, the consumer panicked, and business spending looked to be going extinct. Uncle Sam temporarily bridged the gap.
But the argument that government spending is the only game in town overstates the case. Private sector CapEx spending and hiring is improving (albeit slowly); Consumers have come out of their bunkers and are dining out, going to the movies, hitting the malls, and traveling.
We have not returned to the Home ATM days of 2004-07 — and probably won’t in our lifetimes — but the present environment is a massive improvement from the 2008-09 contraction.
4. Weak Improvement in Employment: The massive labor under-utilization is one of the two biggest drags on the economy (RE being the other). Near record low hours worked suggest that employers can simply increase hours rather than make new hires. Thus, I do not look for a V-shaped employment recovery — forget about 400-500k NFP data — anytime soon.
There are 15 million unemployed, and 8 million underemployed — it will take a long time for them to be re-absorbed into the economy. The 2001 recession took 47 months to return employment to pre-recession levels. This recession will likely take 65-75 months to achieve that goal — if not longer.
5. Real Estate (Commercial and Residential): We do not believe that residential real estate has found its natural price level yet. It remains over-valued. This is due to artificially low mortgage rates, foreclosure abatements and mortgage mod programs. We are probably 10-15% over valued, when measured by Median Sales price to median Income, Rent vs Ownership Costs, and Home Value as a Percentage of GDP.
Commercial real estate tends to lag residential by 18-24 months. It is still adapting to the downsizing of America, particularly retail. The over-investment in commercial real estate of the past decade will take at least another 5 years to resolve, if not longer.
6. Deflation? Inflation?: Well, as my pal Jeff Saut notes, we definitely have “flation.” Just not the type that everyone fears.
As of today, Deflation is a fact, inflation is an opinion. We are still living in a period of falling prices, heavy discounts, wage deflation, asset depreciation and lack of pricing power. The S&P500 is below levels seen in the 1990s; Wages are flat for a decade.
The risk going forward is that the Fed fails to remove the accommodations in time. But they have Japan as an example of ZIRP with no inflation. So long as labor under-utilization is near record levels, they can take their time in tightening.
7. The rest of the world: Europe is a disaster, and is likely to remain that way for a while. Asian economies are doing very well, helping to pull the rest of the world along — but China’s market is at 6 month lows, something few people are discussing. The risk in China’s real estate and stock markets has been mostly ignored,. Commodity regions and emerging markets still have strength.
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Market Overview: Unfortunately, most of the commentary we see about markets has been unusually ignorant, myth driven, and based on rationalizing bad decision making.
Our views:
1. Cyclical Bull, Secular Bear: The secular bear market collapse of 55% was right in line with other such debacles. The collapse was faster and more furious than typical, but the depth was normal. The snapback is also well within the range of bear market rallies — cyclical bull runs that last 6 to 24 months and range from 25% to 135%.
While it is possible that we are witnessing the start of a new 1982-like Secular bull market, the valuations argue against it. Stocks most likely simply did not get cheap enough — or despised enough — to initiate a multi-decade bull run. My best guess about that bottom is its likely 3-7 years away.
2. Snapback: The 75% bounce over a year seems like a lot — until you put it into the context of a six month 5,000 point collapse. we call that the Armageddon trade — Dow 5000! 3000! We’re going to zero! – was a spasm of panic. It has been mostly unwound this past year.
3. Correction coming (eventually): The cyclical bull tends to end with ~25% correction that lasts about a year. So we are always looking for signs that this run is over. Despite the recent turmoil, we have not found confirmation that the bull run is over — yet.
We look at many factors to help identify that inflection point:
4. Liquidity: Institutional fund managers seem to be all in (only 3% cash), while Investors are at only median levels of equity exposure. Liquidity is still abundant, free money abides. Money flows for the past few months have gone into US equities — that is a new element — at about $2B per week.
5. Internals: The market technical/internals remain constructive: Breadth and momentum are positive. New 52 week highs are also strong. Earnings are supporting some of the move, as year over year comparos are absurdly easy. The uptrend remains in place, and until it is broken we maintain an upside bias.
6. Sentiment: The biggest risk is the unusually high level of bulls. Note however that even that has moderated over the past week. We are not at the sorts of extremes yet that make the contrarian in us scream SELL.
~~~
Next week, we’ll look at Macro Overview: Investing & Psychology
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April 29th, 2010 at 7:21 am
All of the above are things we have discussed over the past year — use the search function (top right) orthe category list (bottom right) for the prior posts . . .
April 29th, 2010 at 7:24 am
75 months? Lessee that translates to, carry the 5, add the 2—-6 years and change.
Anyone think that anyone can predict 6 years into the future with less than plus or minus 100% margin of error?
April 29th, 2010 at 7:54 am
“But the argument that government spending is the only game in town is overstating it. Private sector capex spending and hiring is slowly improving; Consumers have come out of their bunkers and are dining out, going to the movies, hitting the malls. ”
Wrong.
April 29th, 2010 at 7:56 am
A data driven but ahistorical analysis.
April 29th, 2010 at 8:01 am
One quibble. Nothing has changed. We’re back into the sea of liquidity; like a kid in the bath with its eye on the serenely floating rubber ducky. The trouble is that the plug can be pulled easily and rapidly and we don’t know by whom. The hidden gargantuan of derivatives connects invisibly. The obvious suspect for plug puller is Greece. Since Mark Mobius recommended the jingle mail approach as the only practical way out it’s not thinking the unthinkable. The plug can be pulled quickly by the black swans swimming unseen but instinctually we know there are more of them out there than ever. frankensteinian surgery has been done to save the financial system but we have no clear control over the beast. As all is now interconnected by global neurons life comes at you fast at the speed of Lehman.
April 29th, 2010 at 8:06 am
You are extrapolating an anomalistic consumer spending report into a trend. Seems like a reach, and without a fully particpating consumer we tread water at best, collapse at worst.
April 29th, 2010 at 8:07 am
Pick and choose what you wish. The market is living a lie, built on investor psychology – monkey see monkey do. Where is the rational actually coming from? No building recovery to speak of. Is it not an old axiom that you can’t have a recovery without a building recovery? Retail sales when compared to an average year are still down 50%. Lets face it some times the capitalistic model just gets broken!
April 29th, 2010 at 8:08 am
“Unfortunately, most of the commentary we see about markets have been unusually ignorant, myth driven, and based on rationalizing bad decision making.”
I keep hearing this myth repeated. Got data? I’ve been long stocks for over a year, even though I’ve been looking for a correction since last June. And yes, I expect a new, lower low on the indexes. Who says “most” bearish commenters are “rationalizing” bad decisions?
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BR: To date, that would be Mr. Market . . .
April 29th, 2010 at 8:09 am
BR, do you have a comment about the chances of SP500 earnings for 2010 reaching what Bloomberg indicates could be consensus earnings of very near $86 vs $90 in the trailing twelve months prior to September, 2007 (http://preview.bloomberg.com/news/2010-04-25/stocks-in-u-s-cheapest-since-1990-as-analysts-rush-to-increase-estimates.html). It’s not clear to me from the article that it’s consensus or the high end of estimates, however. If it is consensus, then we’re at a reasonable 14 p/e on forward 2010 estimates which is quite a substantial discount to the growth rate of the earnings.
I have been thinking that with earnings being so robust, it’s logical to think that the SP500 could reach levels of 2007, perhaps into the 1500′s should the earnings come near those estimates. For 2011, it’s not out of the question to see $100 eps. Should p/e multiple expansion occur, a move up could gather a pretty good head of steam. Obviously, I am assuming the sovereign debt crises around the world are more of a distraction creating a wall of worry, and don’t derail the earnings momentum.
April 29th, 2010 at 8:12 am
Interesting to note the highly skeptical, bearish bent of the early comments. I’ve noticed in the comments section of The Big Picture that this kind of sentiment is something that has remained remarkably unchanged during the rally from the March, 2009 lows.
April 29th, 2010 at 8:25 am
A little elaboration. The problem I have with Barry’s analysis of the data is the frame of reference that he uses to draw his conclusions from the data. Barry’s implicit assumption seems to be that this recession is only different in magnitude from any other post-WWII recession. He also seems to have a particular emphasis on the post-1980 data for comparison – a time of high and declining inflation and high and declining interest rates – the polar opposite of our situation now. (I’m guessing this is because Barry considers these data to be the most accurate and complete.)
I believe this leads Barry to the same error made by so many others back in the spring of 1930 after the economy seemed to stabilize and the stock market made a 50% recovery from the crash.
Are we that much smarter than they were back then? Do we really understand how these kind of crises play out? Do the monetary and fiscal authorities know how to deal with a world wide economy with interest rates at the zero bound? My answers are no, no and no.
For Barry’s sake, for his clients sake, for all our sakes I hope I’m wrong but I won’t be betting any money on it (and I’ll be paying more attention to David Rosenberg’s analysis which incorporates at least some history and recognition that this is more like your grandfather’s recession than your father’s.)
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BR: I have not yet developed an opinion as to whether we see a 1932-like crash (yet).
That is but one example, and you may be over-emphasizing it to the detriment of all of the other crashes the past century.
April 29th, 2010 at 8:26 am
A thoughtful, clear, level-headed analysis, thanks. One thought, perhaps we now are more vulnerable to unanticipated shocks, given both the modest recovery and the fact that much of our capacity to respond to crises has already been used. My view is that, barring such shocks, the slow recovery will continue over the next year, leading to interest rate increases in 6-12 months. I know that is the consensus, but just because it is the consensus doesn’t mean it is wrong. Thus, my plan over the next year is to gradually sell cyclicals, such as oil, into the recovery.
April 29th, 2010 at 8:27 am
who the fuck knows what’s going to happen? There are plenty of reasons to be bearish and plenty of reasons to be bullish. I think bears have a good case right now, but they are fighting the tape and the enormous liquidity pump from Fed.
I don’t think the biggest risk is sentiment at this point. The biggest risk is that the situation in Europe ignites the next funding crisis. Then we have a new collapse and another guarantee of all liabilities by government printing press. Watch LIBOR and make your judgements accordingly.
April 29th, 2010 at 8:30 am
BR, you laid out your thinking clearly… thanks for that.
April 29th, 2010 at 8:36 am
However, from what data do you conclude that this “recovery” is self-sustaining and not just the effect of the trillions of dollars of deficit spending stimulus by governments all over the world, which will fade with the fading stimulus? The patient has been revived and put on massive life support. Victory is being claimed, although the tumor, causing the failure in the first hand, is still there. I remember, a few months ago, you doubted that the “recovery” was “organic”. Where does the change of mind come from?
It is not true that all the data support the the-recession-is-over-and-we-have-recovery-now meme . The trend in the housing data have been pointing downward again in recent months, or just moved sidewards at best. And housing data are a leading indicator, in contrast to manufacturing indicators. In coming months, after the final expiration of the tax credit, the renewed downtrend in the housing data will become even more evident, is my guess. Also the consumer metrics data, which are supposed to be early economic indicators too, are at odds with your recovery story:
http://www.consumerindexes.com/
They show consumer demand through Internet orders has been contracting again for recent months, as well. And if these new data series have any predictive value, GDP will go back to contraction or growth will be at least quite depressed later this year again, maybe as soon as in the second quarter this year. Whether a new contraction would be seen as a continuation of the recent recession, or as a new recession, is just a technicality.
I wouldn’t be surprised, if we had to say soon, “the recovery from the recession” is over and it only has been proven a government stimulus induced cyclical bounce back from the steep fall last year.
April 29th, 2010 at 8:38 am
I will note that the Greek situation is very similar to Lehman, where the government created the expectation that they would step in to save things and then didn’t and then the system blew up. I feel like the Greeks will get bailed out, but I felt exactly the same way about Lehman before they went bust.
April 29th, 2010 at 8:46 am
Then again, of course, it depends on how one defines “recovery”. If everything except total collapse and armageddon is “recovery”, then we are in a recovery.
April 29th, 2010 at 9:11 am
Good post from Naked Capitalism:
The PE ratio for the S&P 500 Index is 23.9 and the forward PE ratio is 19.6 which historically are both very high. In addition, these PE ratios are based on cooked books; that is, FASB rule 157 has been modified so that banks no longer have to mark their toxic assets to market valuations, making reported bank earning numbers PURE FANTASY. If you truly believe that the insolvent Citigroup actually made $4.4 billion dollars in the first quarter of 2010, I have a bridge in Brooklyn that you will also buy.
The political and financial elite are using taxpayer money to save themselves, period, and lying to us about how well their looting is working for the country. Academe is lying to us also—i.e., academe knows that markets are not efficient and free market capitalism is a myth, but are either bought off by the banks or are too scarred to say anything—and the MSM trumpets all of this propaganda because that is what they do.
The elite think that lies will rekindle the “animal spirits” and restore the economy; but, because of the elite’s policy of increasing debt while GDP contracted, the US financial system is now more fragile and at greater risk of deflationary collapse then in December, 2007, when this recession began.
April 29th, 2010 at 9:20 am
Barry is largely stating what is and what has been, some people here seem to be confusing this with some sort of forecast or prediction. His assessments seems to have been spot on since I have been reading this blog (a very long time). It saddens me that given this some people treat his views like he sucked this analysis out of his thumb on a whim.
Great work BR.
April 29th, 2010 at 9:40 am
Barry:
Thanks for the concise, informative insider’s view of the economy and markets. You can’t find insightful, data driven stuff like this in the cut-and-paste world of the MSM.
April 29th, 2010 at 9:46 am
I don’t know, someone tell me… Is it a real bull market if ‘THEY’ have to ramp the futures in the after hours to always open the market above key levels? 20 day moving average? No problem. Just open the market ABOVE it. See, easy.
April 29th, 2010 at 9:49 am
The logically flawed “liquidity” and “money-on-the-sidelines” argument again. There is no money “flowing into equities” ever (or any other assets as a matter of fact). The markets aren’t containers into which money is poured, where money is stored, or from which money is drained again. When investors buy equities, someone else has to sell equities. Equities and money only change their owners. The amount of “liquidity” out there stays the same. It’s the same afterward as before.
April 29th, 2010 at 9:53 am
Near record low hours worked suggests that employers can simply increase hours rather than make new hires.
As hard as this will be for workers at least this will be a more efficient method of recovery.
Credit is definitely the epicenter of this whole mess. I believe we have to watch for its come back. It should be one of the last things to come back. I think it will be different than before but that will be the final stage of the recovery.
That is all assuming they don’t freeze things out again
April 29th, 2010 at 9:55 am
Interesting… I think we are in a depression, gov is spending 10% GDP in dept to gloss over the fact we are in a depression. We have nearly 40mln people on food stamps and crazy long unemployment that is ticking up spending by the consumer. Until gov spending ends we are just glossing over the real problems.
But, I think its tough to bet against gov spending… though when the game ends this time it will be much, much worse! If our borrowing costs go up 2-3% our serving of dept will double, this will be a huge chunk of the budget.
The game can go on for much longer than most think (just look at Japan), so the rally may still have legs and 25% drop is in the cards… just maybe not until 2011ish?
April 29th, 2010 at 10:01 am
ItalicBold,
There is a substantial difference between the diagnosis “the recession is over and the economy is healing” and the diagnosis “temporary bounce back from the steep fall last year due to massive, unprecedented government stimulus”. It’s like the difference between the diagnosis, the patient was healing again, because he felt better, and the diagnosis, the patient wasn’t really healing, he felt better and showed some superficial revival, because he was put on morphine. Barry’s diagnosis isn’t just a stating what is, it’s a conclusion he draws. He asserts, w/o really proving it, this conclusion can be drawn from the data. I doubt he is right. There are data that contradict his diagnosis. We will see later this year whether he is right about the recession or whether it materializes what I think is more probable.
April 29th, 2010 at 10:03 am
@ItalicBold Says: April 29th, 2010 at 9:20 am
It saddens me that given this some people treat his views like he sucked this analysis out of his thumb on a whim.
Italic,
You got me. That is the first time in my 40+ years on this planet that someone has used that word picture in that context. I give you high marks for creativity. ;)
@mark Says: April 29th, 2010 at 8:25 am
Are we that much smarter than they were back then? Do we really understand how these kind of crises play out? Do the monetary and fiscal authorities know how to deal with a world wide economy with interest rates at the zero bound?
Mark,
As long as the fed keeps throwing paper out on the streets and the people come running out to play with it the game will go on. We just have to learn to deal with the consequences
April 29th, 2010 at 10:10 am
The post is great. I think there is some horrible misinformation in some of the comments.
RC – Why when BR says something like – “a broad set of economic data show strong and strengthening recovery” and then he even mentions that types — “retail sales, ISM, employment, corp profits, tax witholding, housing, confidence, etc”… Then you pick 1, a single 1. You pick housing and claim, “it is flat or headed back down”? First, I disagree with your reading of the data. Second, so what? How is your 1 data point compelling?
In one other comment I saw PEs that were just wrong. SPX did $65/shr last year. Is set to do $82-84/shr this year. And that 2010 EPS number is moving up almost every week. So at 1,200 on SPX we are between 18x (ye 2009 numbers) and 14x (fwd 2010 current est). Gotta get the basics right.
BR – Why do you think this is a “secular bear”? When would you change that view? Generally… I think there is an enormously high chance your wrong and that the March 2009 bottom (or the July thrust from 850 to 950) was the start of a new secular BULL market. And that all classic recovery forces will align to support that.
Just to add — all the excesses of both 1999-2000 (stock overvaluation) and 2005-07 (RE/commodity bubble) were burned off in March 2009. It fits. For me, thats going to start a new secular bull. You are kinda hedging your bets to keep one foot in the long-term “double dip” camp. Aint gonna happen.
April 29th, 2010 at 10:26 am
TBP
labor vs business
blue collar man vs white collar man
shovel pusher vs paper pusher
who what when where why how
TBP
to many middlemen in the system – each with engrained devices to survive … storage bins are no longer trusted … stuffism ain’t what it used to be here in the 21st … gotta keep mobile – to hunt & gather & protect from victimization
To many people making to many problems in a complex dwindling resource planet.
ps – how many news addicts need to cease – to dump that overhead in everything?
pss – who has real work for this news-pusher .. what should I store in what .. when should I have switched over .. where should I hide .. why should I care – I’m past 50 (with a dog) .. how can this work out still?
April 29th, 2010 at 10:34 am
posted “Credit is definitely the epicenter of this whole mess” .. don’t forget abundance of labor forces the world over (in varying scales of growth to overall) – definitely a factor … handle that one in a pc world … we live in interesting times
April 29th, 2010 at 10:37 am
Another point re earnings: You’ve seen the uptick over the past year driven primarily by cost cutting (reductions in headcount, delay or cancellation of capital spending etc) and in some specific industries government spending and manipulation (bank bailouts, FASB 157 suspension, auto bailouts). I’ll concede there’s been some uptick in capital expenditures in the past quarter (you can only put things off so long and vendors have cut prices) but aside from that how do you see any future earnings increase when the current primary driver has been cost reductions and not consumer spending. Absent consumer spending it would seem that you’re seeing eps projections that are heading for a swan dive.
April 29th, 2010 at 10:40 am
Consumers People who have been liquid all the while “…have come out of their bunkers and are dining out, going to the movies, hitting the malls, traveling.”
That covers- I don’t know- 10% of the populace? You can (legitimately) throw in a few swashbucklers in there to jack up the percentage. For the rest, those that live (pretty much) paycheck to paycheck, it’s still Death Valley out there…even more so for the youngins, who are just starting to get back their jobs. It’s just like college; only the drink specials are getting people to come out.
The weakness shows up on the weekdays. Those Syosset steakhouses are packed, but the cougars are conspicuously absent from the WW Mall and the Roosevelt Field Mall is similarly wide open. People are traveling but, except for the high-end, the City is empty on all of the above.
April 29th, 2010 at 10:41 am
“As of today, Deflation is a fact, inflation is an opinion. We are still living in a period of falling prices, heavy discounts, wage deflation, asset depreciation and lack of pricing power. The S&P500 is below levels seen in the 1990s; Wages are flat for a decade.”
First, wages are flat for roughly four decades. But that doesn’t mean there’s deflation. I wish someone, anyone, would get that falling prices for goods can represent a number of things, only one of which is deflation. The micro-economic reason for a declining price is usually either lower costs of production, or productivity improvements or declining demand. Computer and flat-screen TV prices have come down fantastically over the last two decades, but no one attributes their fall to “deflation”. Neither should declining prices and wages necessarily be indicative of deflation. Deflation is a monetary phenomenon, which happens when money, across the board, becomes more valuable relative to the things it is used to buy. In an era of ZIRP, money could not be cheaper. It’d be hard to attribute declining prices for goods, services and wages to more valuable money because money is as cheap as it can get. Declining demand coupled with productivity improvements perhaps explains things. But not an increase in the relative value of money.
April 29th, 2010 at 10:47 am
@rootless_cosmopolitan
A patient can be in a state of healing while in ICU, I don’t think Barry has implied that the patient is out of ICU (he states quite clearly he believes this is a secular bear market). As always in these situations the patient is not out of the woods, but for the time being is stable and showing signs of improvement. As I said he is calling it how it IS not predicting the future.
April 29th, 2010 at 11:10 am
Fully agree w BR
April 29th, 2010 at 11:16 am
“Just to add — all the excesses of both 1999-2000 (stock overvaluation) and 2005-07 (RE/commodity bubble) were burned off in March 2009. ”
How do you figure? (What are your figures?) Take just about any measure of credit in the system and it shows we’re just beginning to deal with credit over-expansion/capital mis-allocation. Here’s consumer credit outstanding (de-leveraging??) http://www.federalreserve.gov/releases/g19/current/g19.htm
April 29th, 2010 at 11:27 am
@Zell
See what an announcement that the SEC was going to charge Lord Blankfein’s corporate domicile with fraud did to knock off a quick 200 from the dow. And once they made their statements of obfuscation and misunderestimation how quickly it came back.
It’s not going to take a terrist attack to knock us back to November 2008, or March 5, 2009. It might just be the breeze from a flutterby’s wings.
April 29th, 2010 at 11:29 am
cognos,
You must have read another posting by Barry. In the posting above, he doesn’t mention all of these data you claim here to support his conclusion. You obviously are making things up.
First of all, you aren’t telling the truth. This is quite bold, considering that my comment is visible above. I also mentioned the consumer metrics data. These are a whole block of data. Secondly, this isn’t a number game, who has more data points available. One has to look at the quality of the data and how much forward looking the data are. Housing data are leading indicators for an economic trend. For instance, new home sales fell to an all time record low since this data set has been recorded. It never has happened before that new home sales fell below the low of a preceding recession after the recession was supposedly over and without having a new recession. Shouldn’t this call for some attention at least, that the picture might not look as rosy as you believe after all? I’m not going to repeat what I wrote about the consumer metrics data. In summary, I refer to forward looking data, in contrast to manufacturing indicators, which rather are backward looking.
Do you know the difference between reported earnings based on GAAP and “operating earnings”?
I also find it always funny how you sell here analyst predictions as if they represented reality, and as if one could draw conclusions about the future development of the economy and corporate earnings from those analyst predictions.
That is, about 40 to 50% overvalued compared to a historical average of 12 to 13, since you are talking “operating earnings” here.
That is, still above the historical average.
Exactly.
I very much doubt that this assertion is based on any real data and facts. It looks more like wishful thinking.
That would be a first that a new secular bull market started at a P/E-ratio (reported earnings) of about 15 and at a dividend yield of about 3%. Before, secular bear markets ended at P/E-ratios and dividend yields of about 5-10 and 5-7% or higher, respectively. Now, what are the odds that this time it is different? Why should I believe that? Even more given the economic outlook of continuing debt-deflation?
http://www.multpl.com/
http://www.multpl.com/s-p-500-dividend-yield/
April 29th, 2010 at 11:32 am
@Curmudgeon
This should be tatooed on the inside of everyone’s forehead:
“Deflation is a monetary phenomenon, which happens when money, across the board, becomes more valuable relative to the things it is used to buy”.
April 29th, 2010 at 11:32 am
(Sorry, had to run and deal with the kids for a minute.)
Here’s the same data in chart form.
http://www.market-ticker.org/uploads/2010/Apr/credit-type.png
Remember, in previous post-recessionary periods (post-war), we had room to cut interest rates – and they’ve been falling, broadly, since about ’82 — but we’re at zero right now. Plus, most previous post-recessionary periods were marked by credit expansion to pull forward demand. Consumers are not able to increase debt at the rate they could in previous periods. In fact, we’re likely to see credit decline and/or stay flat. We may have stopped the free-fall for now, but we won’t see growth like before without further distortion (I don’t think even that will happen, however).
April 29th, 2010 at 11:41 am
Who says “most” bearish commenters are “rationalizing” bad decisions?
~~~
BR: To date, that would be Mr. Market . . .
————————————————–
BR, my question was how you know the bearish commenters missed the rally. If they did miss out, then yes, Mr. Market has given them a thorough drubbing. But the notion that bearish commentary is just rationalization, while possibly true, is simply asserted here. Seriously, has anyone done a survey?
Maybe you’re right, but it looks like your numbers/data bias (ironically) has led you to make a gut-based assumption here.
April 29th, 2010 at 11:43 am
@flipspiceland:
So you think tautological nonsense that doesn’t explain anything should be tattooed on the inside of everyone’s forehead. Deflation happens when “deflation” happens (=the relative value of money increases).
April 29th, 2010 at 11:56 am
My biggest fear in this whole economic situation is that we begin to face severe inflation, and interest rates are forced much higher, very quickly, effectively ending credit deals for a long period of time. Of course, some credit would be done quickly to beat those climbing rates, but at some point, rates would trump the demand, and we are right back in this again. One would think that natural market forces would settle a balance in inflation/deflation, but we know market forces can have little to no impact in some sensitive areas of the economy (energy prices, health insurance, et al).
April 29th, 2010 at 12:16 pm
alright BR-
bore me why don’t you-
if we are truly looking at the big picture- how are we better off than 2 years ago? Outside of the panic trade driving down equities- what has changed for the better?
what has been accomplished? Fewer but even larger banks w/ an implicit USG gurantees- bankers above the law- debt/deficits unabated- locked in polarization (Democrats refuse to cut public spending and Republicans refuse to raise taxes guranteeing countinued deficits indefinitely)- 10% unemployment- RE on life support w/ tax incentives (nothing like getting a $8000 spiff to buy a depreciating asset that cost hundreds of thousands of $$$)-
what has the USG done to make our future a brighter and more hopeful one?
April 29th, 2010 at 12:19 pm
@ahab: BR’s clearly not looking at THE Big Picture with his post. He’s looking at HIS Big Picture. Important distinction. BR’s had a good year personally but that ain’t THE Big Picture. Far from it.
April 29th, 2010 at 12:25 pm
No one here (including BR) has any idea of where we truly are or what is coming. You can’t comprehend chaos. Or predict its outcome.
April 29th, 2010 at 12:41 pm
An anecdote:
Our daughter advertised on Craigslist for a dishwasher for her small restaurant here in Santa Clara. 24 out of 32 applicants had college degrees.
April 29th, 2010 at 12:59 pm
“Deflation is a monetary phenomenon, which happens when money, across the board, becomes more valuable relative to the things it is used to buy”
or is it
Deflation is a “currency-color” phenomenon, which happens when “that” money, across the board, becomes “LESS valuable to hoard” relative to the “precious” things it is used to buy .. “because a precious is in the eyes of the beholder and time relative”
and on “are we better off than 2 years ago” – Nope .. but the blinders are off .. and that may not be better either .. DisCap anyone .. Bueller Bueller
April 29th, 2010 at 1:01 pm
dwkunkel-
an undergradudate degree is the new high school diploma
manny-
that’s the way I read it too-
I mean really- what has changed? In fact things are setting up for an even shakier more fragile economy w/ ZIRP and QE becoming institutionalized long term Fed policies-
I find it hard to believe that BR doesn’t grasp that we are not on the road to any long term recovery-
of course- maybe he is a believer of this line
“don’t bet against the US consumer” – you see manny- all we have to do is go out and buy shit and things will work out swimmingly
April 29th, 2010 at 1:13 pm
[...] A macro overview of the economy and markets. (Big Picture) [...]
April 29th, 2010 at 1:15 pm
[...] from Ritholtz Posted by ducati998 under economy Leave a Comment It is time to take a big picture look at everything: This is a summation of everything we have discussed over the past month and [...]
April 29th, 2010 at 1:31 pm
Barry’s bullishness started almost exactly when BHO got into office. I guess we know what drives his “Big Picture”.
I mean really, can so much bad news be spun any better these days? I mean, when we were at 4% unemployment under Bush, you would have thought the end of world was only days away. Now, at 10%+ things are just smelling so rosey. What a bunch of MSM BS.
Soros and his croonies stopped betting on the destruction of America once he got his guy in and wala everything was fine in the world.
April 29th, 2010 at 1:33 pm
Yo, check out my new tat:
Deflation is when you slowly reduce the volume of multiple asset bubbles simultaneously.
then maybe: ZIRP or Die!!!
or maybe a donkey and an elephant at a tea party with teeny-tiny cups and a cute little kettle. :D
April 29th, 2010 at 1:33 pm
I have to also admit, and have written it before that BR’s view feels not like THE Big Picture, but the MARKET Picture. A lot of the data used to back up a long position in stocks, depends on your bullish or bearish interpretation of it. It is obvious that ZIRP has ignited a new wave of speculative fever, while its effects on the real economy are limited (albeit a lagging effect). Structurally everything has deteriorated further, although we have a tepid cyclical improvement + extend and pretend within accounting.
But his market call was and remains great, even if there are no great fundamental reasons for it and is more based on gut feeling / technicals / experience / sentiment knowledge.
April 29th, 2010 at 1:39 pm
@flipspiceland:
This should be tatooed on the inside of everyone’s forehead:
“Deflation is a monetary phenomenon, which happens when money, across the board, becomes more valuable relative to the things it is used to buy”.
So you think tautological nonsense that doesn’t explain anything should be tattooed on the inside of everyone’s forehead. Deflation happens when “deflation” happens (=the relative value of money increases).
@rootlesscosmopolitan:
Please forgive me if I appear to be cracking wise, but isn’t saying that deflation equals an increase in the relative value of money essentially the same thing as the explanation it claimed was a tautology? Sounds like tautologies are cheap, even if money, in a deflationary environment, is not.
April 29th, 2010 at 1:47 pm
“But his market call was and remains great, even if there are no great fundamental reasons for it and is more based on gut feeling / technicals / experience / sentiment knowledge.”
Second that.
April 29th, 2010 at 1:49 pm
The Curmudgeon,
Of course it is the same. I only repeated the tautology to emphasize it.
April 29th, 2010 at 2:04 pm
One thing I would like to get a handle on is the possibility that unemployment could go down because of early retirement of boomers. If stocks recover enough some of the better positioned boomers may decide it is time to quit. Some of them may simply be forced to retire from lack of available jobs and find that they can live on the low income.
April 29th, 2010 at 2:15 pm
rootless_cosmopolitan Says:
April 29th, 2010 at 1:49 pm
The Curmudgeon,
Of course it is the same. I only repeated the tautology to emphasize it.
~then what, pray tell, is your non-tautological definition of deflation?
April 29th, 2010 at 2:27 pm
@ Cdale_dog Says:
“April 29th, 2010 at 1:31 pm
Barry’s bullishness started almost exactly when BHO got into office. I guess we know what drives his “Big Picture”. ”
Which was a brilliant call, because the market is up 75% since March, 2009, the second biggest market rally since the Great Depression started.
How come all the Limbaugh/Hannity types who were screaming that the market going down in the first quarter of 2009 was proof that Obama was about to wreck the American economy, aren’t now saying this monster rally is validation of the Obama policies?
April 29th, 2010 at 2:31 pm
“this monster rally is validation of the Obama policies?”
why . . . is that what your saying? You must have bought into the Bush Boom mantra as well I imagine . . .
April 29th, 2010 at 2:45 pm
I have to defend Barry as I see only a few others have. Barry’s market call in March was spot on. He was not making an economics call, it was a market call. I don’t believe Barry operates much on “gut feelings” either. He expresses his feelings but seems to operate with an excellent data-driven combination of technical analysis and sentiment, the latter of which he seems to use superbly.
I don’t see where Barry comes out as a raging optimist, either. Only that he calls the market as he sees it and I do follow his every word. He sees this as a cylical bull within a secular bear and it seems hard to argue that. I also respect his openness to the possibility that a new secular bull has started. While it may seem unlikley (or worse), I see his ability to be open to what unfolds in front of him and his ability not to get fixed on a theme or ideology as a huge strength. And clearly it has benefited him well (and anyone that’s followed him at least part way).
April 29th, 2010 at 2:49 pm
No, it’s not what I’m saying.
But it WAS what they were saying, at least when the market was going down. http://mediamatters.org/research/200903100036
“Welcome to Day 46 of Obama’s Bear Market.” Sean Hannity, March, 2009
April 29th, 2010 at 3:11 pm
The Curmudgeon,
it is OK as definition of deflation so say that the general price level decreases (or the relative value of money increases), but it doesn’t explain anything yet what actually causes the increase in the relative value of money.
April 29th, 2010 at 3:12 pm
R or D government policies set the pace .. ok .. hows that trickle down workin for “survival of the many outweight survival of the one” in the “control of the government is the best path to prosperity” world of some’ism .. when is that Robinhood hitting the theaters
I think this website is a test for sentiment to assist in being the decider with other peoples money plus ones own .. it has the ability to flow sentiment too (me thinks I’ve seen it) .. but but helps a bunch to have a super large portion trickle thru ones fingers “like sands thru the hourglass go the days of our lives” so bear bull no matter
We out here in middle America just gotta work on this heavy weighted trickle:
http://en.wikipedia.org/wiki/File:Assets_of_Federal_Reserve_Banks_from_1996-2009.jpg
April 29th, 2010 at 3:28 pm
Welcome to day 400 of Obama’s Bull Market!
Please position your portfolios for day 800… the ride will continue in the same direction from here.
April 29th, 2010 at 3:53 pm
The turn in March came shortly after the passage of the stimulus bill. It was a natural thing because all the smart people realized that with that bill passed we would almost certainly avoid the economic Armageddon (the realistic fear of which had driven stocks down relentlessly since October). The passage of the stimulus was the result of a combined effort from Obama, Democrats and 3 intelligent GOPsters. So the rally should appropriately be called the “sensible Democrat” rally. The dump in October and its aftermath, was the direct result of failed policies and failure to regulate by the Bush administration, and the GOP legislators, who were in power for most of the previous decade. So the dump before the March 09 rally should appropriately be called “the GOPster dump on America”.
April 29th, 2010 at 4:04 pm
“Welcome to day 400 of Obama’s Bull Market!
Please position your portfolios for day 800… the ride will continue in the same direction from here.”
Now, that’s what I call numbers-driven analysis!
——————————–
DeDude, you’re kidding, right? If not, never mind.
April 29th, 2010 at 4:10 pm
Dedude-
you’re like a broken record-
always the same nonsense over and over and over-
as if regulations and policies weren’t relaxed during the Clinton administration- remember Rubin- remember the repeal of Glass-Steagall- which Clinton signed in 1999-
but I am sure your feeble mind cannot grasp anything beyond your partisan drivel-
there are no good guys and there are no bad guys in politics
April 29th, 2010 at 5:15 pm
IMO, if you’re not hedging your bets in this environment, you’re certifiable. (Or you’re lying just to push people’s buttons on a financial blog.)
Re: patient in the ICU, seems to me you can say the patient is stabilized (true IMO) and on the mend (true IMO) but qualified by saying that the patient will recover fully ONLY IF conditions X, Y, and Z occur/continue to be present/absent. Thus the need to hedge.
I wonder now (hindsight at work here) how many analysts at big financials knew we were in for a sovereign debt crisis as a logical extension of the credit crisis 18 months ago? Exposures to bad sovereign debt are about to unwind in a big way. That’s clear. This takes me back to the tastes great/less filling inflation/deflation debate that raged on TBP 18 months ago. A bunch of bright people here spotted and discussed the issue immediately: sovereign default/deflation or printing money/(hyper)inflation?
I’ve been thinking lately about the extent to which RE asset prices underlie household wealth and gov’t tax revenue — hence the inevitable sovereign debt crisis (hindsight again). The best that can be said is that Case-Shiller says we’re treading water YoY and that ain’t good. Permanent loss of household net worth relates to extensions of credit or lack thereof. Remember the trillions that vaporized in an instant 18 months ago? Still ain’t coming back.
I do think BR struck a nerve critiquing bearish views as money-losing. But shouldn’t a good trader be able to find opportunities in any environment? The notion put forth by the cognos-centi that you have to adopt a rosy optimistic view about The Economy to make money seems binary and silly to me. I think it’s really just bear-baiting, preying on people’s tendency to have regrets and say “If only…” and “I shoulda…” Whatever.
April 29th, 2010 at 5:28 pm
[...] uptrend remains in place, and until it is broken we maintain an upside bias,” Barry Ritholtz says. “We are not at the sorts of extremes yet that make the contrarian in us scream [...]
April 29th, 2010 at 5:49 pm
BR wrote – “I have not yet developed an opinion as to whether we see a 1932-like crash (yet).”
I understand the caution but to get the glory you can’t wait until it’s obvious. Times a-wastin’.
How the Common Man Sees It wrote: “As long as the fed keeps throwing paper out on the streets and the people come running out to play with it the game will go on. We just have to learn to deal with the consequences.”
The data suggests that “the people” continue to deleverage so I agree re: the swells on Wall St. but not re: the common man on Main St.
April 29th, 2010 at 6:26 pm
Ahab; yes Glass-Steagall was a problem because it opened certain possibilities and handed out freedom that could be abused. However, it could not have become a disaster without GOP regulators deliberately being asleep at the wheel in the following decade.
“there are no good guys and there are no bad guys in politics”
You are either kidding or completely asleep at the wheel. Every piece of good legislation is opposed by bad guys and every piece of bad legislation is opposed by good guys. Politics is nothing but good and bad guys.
April 29th, 2010 at 6:34 pm
DeDude,
John Dugan. OCC. That’s the one you want to be sticking with a pitchfork. I’m pretty sure he’s a republican, and I don’t really care. But he’s the reason Vikram Pandit still gets his ugly mug on camera every now and then. Sheila Bair (who I know is a Republican) had very different ideas about what to do with the big banks, but OCC has gotten in the way. Tim Geithner is a Democrat. It really doesn’t matter.
April 29th, 2010 at 6:36 pm
Dedude-
you make no sense- what you consider to be bad legislation is considered by others to be good legislation and what you consider to good legislation is considered by others to be bad legislation-
you have picked a side that you consider to be good- but that does not make it so-
so as I said- there are no good guys and there are no bad guys in politics- but looking through your partisan lens makes it appear so
April 29th, 2010 at 6:55 pm
Ahab – that teddy bear is killing me – excellent Avatar!
April 29th, 2010 at 7:08 pm
Thor-
did you see the last South Park?
April 29th, 2010 at 7:23 pm
Ahab – no I missed it! Now I’ll have to watch it!
April 29th, 2010 at 7:43 pm
Here is my 2 cent prediction. We will know the top when the Gov’t sells its GM stock.
April 29th, 2010 at 7:56 pm
Anyone who thinks that the EU mess will be Lehman redux is neglecting that the ECB is already talking about doing emergency QE – buying the bonds of EU states in a massive way to prevent EU bank failures. This will eventually present a problem when those bonds default anyway several years from now, but it kicks the can down the road. It will buy the EU time to federalize core functions like deposit insurance, and to impose federal taxes to pay for it.
April 29th, 2010 at 9:20 pm
Barry, thank you for this post, it is really informative! And, thank you so much for changing your stripes in March of last year.
I agree with, or at least see the rationale, in each of the bullet points in your Macro-Economy Overview and Market Overview.
Though, imho, i believe that your bullet point on liquidity is totally understating reality though. The incredible stimulus being provided by a +1 TRILLION fiscal policy, and a extreme monetary policy of sub 1% interest rates with 4%+ long term rates gushes money into the system. Hedge funds and such are borrowing massive amounts of nearly free money and inflating asset prices with it, such as stocks.
The federal government, with it’s partisan divide, is like our state government in California. It will not be able to significantly reduce the deficit, thus continuing to provide incredible fiscal policy stimulus. And the Fed yesterday said it’s looking at “wage growth” as a clue as to when to start slowly restricting monetary policy. With, like you say, 23 million unemployed and underemployed, and intense international competition by countries that manipulate their currencies to steal most jobs and product production from us, and virtually no jobs being created otherwise by our economy, it’s going to be a very, very long time before the Fed sees significant wage growth.
In the meantime, it’s party on with all the money flowing into the stock market and other assets. Just like it was when the Fed panicked over the Asian and LTCM crises in ’98 allowed the tech stock price boom. And like when Greenspan provided “extra liquidity” to mitigate “expected” Y2K problems, allowing the final bozo dot-com stock price inflation. Until, the liquidity was pulled back, resulting the the necessary and nasty hangover from the party.
I wish our government, and economists, understood job creation via saving and growing industries, rather than just throwing money at the problem in a classical economics manner. As well as I wish the government understood how to get the money out via significant loan growth to the real economy and via economically constructive projects, while restricting money to the asset price inflation speculators.
It’s going to be a very bubblelicious party until the Fed and the federal government take the punch bowls away, which is going to be a long time from now. Use this to your advantage, I plan to.
imho.
April 30th, 2010 at 6:38 am
[...] couple other notes, Barry Ritholtz agrees that we are in a deflationary environment: As of today, Deflation is a fact, inflation is an opinion. We are still living in a period of [...]
April 30th, 2010 at 7:32 am
Ahab; I decide what is good and bad based on facts and on who is served by legislation. The GOPsters just handed their masters (the Wall Street bonus babies) a $50 Billion gift by insisting that Wall Street should not be asked to build up a fund to cover expenses of their future f@ck ups (oh no that – and taxes – is only for the little banks/people). So who will be paying for the clean up next time they cr@p on America. Main street of course will be forced to pay for Wall Streets mistakes. Do I think it is a good thing to take $50B from Main Street and hand it over to Wall Street – no its bad. Same thing with question of whether we should protect the consumers on Main Street or the profits of Wall Street – not so hard to figure out what is good legislation and who are the bad guys.
April 30th, 2010 at 10:11 am
Just a thought, is it possible the average joe is spending money on movies, dining out, etc., because he feels he might as well get SOMETHING for his money? We forgo consumption now, save and invest, so we can consume in the future. If we are getting zero return on our cash and have complete distrust of the financial markets and government shenanigans why not consume now?
Damn you and your ZIRP “man”. You punish savers and force us to chase yield and risky “investments”.
April 30th, 2010 at 10:26 am
@ DeDude: actually the stimulus bill did not overturn the market in March. It only “worked out” after the FASB change of accounting standards. Although I saw this coming, I assumed people would still see thru the BS and see that banks are still insolvent – my mistake, the game of extend and pretend and pump and dump was restarted with new vigor.
@ BR: my job is in portfolio management with hedge funds. Just had a call with a manager specializing in systematic pattern recognition, who is in drawdown this year. They do not have any explanation for it, except mentioning that the S&P 500 is behaving in a strange manner and thus affecting all other markets. The manager was quite positive in 2009 though, where most other systematic managers (mainly trend-followers) were slightly down due to the sharpness of the reversal. The manager also thinks that a reversal in equities is now quite likely and expects to have better performance in this environment.
Had also a call with an “old guard” macro manager, who till recently was on the “inflation bandwagon” (buy commodities, equities as the money supply has exploded). He has now suddenly reverted completely and is short equities / long bunds & JPY and exiting commodities. His reasons for an impending asset deflation (a bigger crisis than 2008) are:
1. YoY money growth in G3 is close to zero / negative in EU
2. Club Med fiscal crisis / bond restructuring will tighten lending by EU banks further
3. EM unable to be the engine of growth, as need to tighten strong inflationary pressures, arising from hot money inflows leading to high credit growth (note also China had a first C/A deficit)
4. US congress does not understand the true reason for the crisis and the financial reform bill will not change anything but just concentrate power further and lead to even less efficient resource allocation than now
April 30th, 2010 at 12:28 pm
“It only “worked out” after the FASB change of accounting standards”
If you think that allowing fuzzy math on accounting would drive investors back into the stock market, then I have a bridge I will sell to you-cheap ;-) People did see through the BS. But they also realized that with the economy growing, and free money from the Fed, even C would live to see another day – and it turned out they were right. Banks bought enough time and the assets they would have been forced to sell (and/or book) at 5c on the dollar a year ago, is now selling at over 50c on the dollar. So even thought reality is not nearly as rosy as the FASB allows them to claim, nor is it the doom and gloom of insolvency that you claim. But I do agree that we are due for a correction although I don’t think it will be more than 20-30%.
April 30th, 2010 at 1:21 pm
“The economic backdrop seems to be confusing quite a few people. Perhaps its the psychology of the moment. I keep hearing weak, data free analysis.”
“…most of the commentary we see about markets has been unusually ignorant, myth driven, and based on rationalizing bad decision making.”
…Considering the comments above (which once again come across as BR stroking his ego), the puke that Barry calls his Macro Analysis and Market Analysis here comes off especially horrid. Reading the “analysis” was actually tiring, as these points could have been pulled off of the reports of the vast majority of strategists I read these days. Yes, in fact, they are all saying the same thing (at least in what I’ve read), making this post depth-deficient. More importantly, that BR comes out of the gate saying that most people have been “confused” or “ignorant” and using “data-free analysis” makes this weak post look that much worse. The level of critical analysis on this blog since BR’s full turn to bulldom has consistently waned, often with economic data being left “as released.” And China has been mostly ignored? By whom? Certainly not I or people in my circle. That comment seems very out of touch.
Listen, I get it. You are bullish, and talking against your book would be a fool’s game. But you don’t need to keep throwing stones and generalizing about those of us who choose to remain skeptical just to stroke your ego. I am close to “all in” this market as well – reluctantly – and my performance has been acceptable, yet I choose to separate that decision from how I analyse the data and the level of skepticism I approach it with. I agree with your market calls (mostly), but it looks like your economic analysis is wavering, perhaps to support your market call (subconsciously seeking confirming data)?
April 30th, 2010 at 1:22 pm
“I decide what is good and bad”
yeah that’s the problem right there Dedude- scary indeed-
here’s why it is an issue to Republicans- from Bloomberg-
“At issue is the $50 billion fund that large financial firms would be required to pay into and that would be used by the government to cover the cost of dissolving a failed company. Republicans say the fund would guarantee government relief to the companies that support it and label them as “too big to fail.” Democrats say regulators would use the fund to euthanize, not prop up, failed firms.”
so your head is so far up the Democrat Party’s ass you can not even grasp that there is a reason beyond your impression that the Republican’s are the party of the bankers- pleeeeaasseeee-
admit it- you’re just a lackey without one original thought
April 30th, 2010 at 1:43 pm
Cognos said ““Just to add — all the excesses of both 1999-2000 (stock overvaluation) and 2005-07 (RE/commodity bubble) were burned off in March 2009. ”
Ok, maybe RE. But other than a temporary blip, how have commodity prices burned off the excesses? Show me that data. In spite of higher inventories in many cases, commodity prices are again near or higher than levels we saw at the peaks of 2007-2008.
The statement is pure stupidity, which we have come to expect from a shill like Cognos.
April 30th, 2010 at 2:25 pm
I think this summary was well-written.
Our current economic situation is very complex. I am of the belief that although there has been some economic strength since the depths of the crisis, this economic strength will prove to be temporary, unfortunately…
As far as the markets are concerned…I think there are many indications that sentiment is wildly bullish from a historical standpoint. There are a lot of other causes for concern, as well, including the prevalence of bubbles both here (U.S.) and internationally.
April 30th, 2010 at 5:07 pm
ahab; come on put on your thinking cap. A $50B fund of Wall Street company money “would guarantee government relief” – it’s their own money!! I guess the only original thoughts you can spout is the Fox talking points.
It is actually the lack of such a fund that would guarantee that the next crisis again would be payed for by the public. The government will be faced with the choice between the $50B cost of saving our financial system (and yes that is a low ball and the fund should be much bigger) from a freeze (or collapse), or letting the collapse happen and instead have the trillion dollar cost of a severe recession (payed for by main street, if government fail to enact stimulus measures). The one thing we know for sure by not having that fund is that the cost of Wall Streets next f@ck up will not be borne by those who f@cked up. The gains go to Wall Street and the losses are Main Steets – and all the GOPsteres clapped in their little hands.
April 30th, 2010 at 5:31 pm
I mean you got to be a brainwashed twurp to believe the idea that if Wall Street has to put up $50B to help sort out their own f@ck ups, then these f@ck ups will cost the public a lot of money, but if Wall Street does not put up any funds then the f@ck ups will cost the public less? Someone please walk me through the logic of that alternative (antimatter) universe. Until I see a coherent argument I have no choice but to think that this is standard Foxification procedure where you call black for white because there is always a lot of idiots out there who will swallow it without questions (you know it “sounds right”). The only thing I have seen so far is that the GOPsters intervened and saved Wall Street a nice round $50B – and that is a FACT. That money will not only be nice when bonus time comes around, it will also give them a competitive advantage over the small banks who have to pay up front for their own resolution – sort of a double bonus for Wall Street.
April 30th, 2010 at 9:41 pm
[...] A macro overview of the economy and markets. (Big Picture) [...]
May 1st, 2010 at 7:15 am
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May 1st, 2010 at 4:10 pm
[...] Barry Ritholz’s The Big Picture blog outlines the, well, big picture [...]
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[...] the dip is with 10/2007-03/2009). The perspective conveyed by Barry Ritholtz’s handy Macro Overview is substantially simliar to mine as far as what it covers. But, there a few emergent variables to [...]
May 2nd, 2010 at 5:38 am
[...] Ritholtz has a terrific look at current conditions in Macro Overview: Economy & Markets as well as some timely comments on The ‘Worrisomely Unworried’ Crowd. Later,however, [...]