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13 comments:
wow. more and doom and gloom. he and peter schiff must be the two lives of the party. ha!
nice blog, btw, roger.
diva
As a counter for the gloom and doom, Bob Brinker (whom I have personal problems with but he has a good long term record) just issued a bulletin telling his subscribers to (I'm paraphrasing) lump sum into the market at S&P 1380 or below. So he's pretty bullish at these levels....
You can always find a "guru" to support your current thinking on the market.
thank you Diva.
So either Schiff or Kudlow will turn out wrong. lol
Or if you prefer Roubini or Brinker (per RIPs' comment I don't read Brinker)
I'm a hand wringer and Steve Roach is a chop your hands off and bleed to death sort of naysayer.
There are really smart people forecasting very different things. We'll know that one camp or the other will be right and will gloat.
well it wont be the 1st time sooo they should be ok with that, roger. lol.
btw, all, i am new to reading these gr8 blogs like roger's and fwiw, there is a good ^IXIC msg. board located at InvestorVillage dot com.
good market commentary and stuff. fwiw. i read mostly, and post once in awhile. (roger u know bobo from vix and more)
btw, i used to listen and enjoy bob brinker on the radio and havent in awhile. i do think he has made some good calls and he is probably more fun at a par-tay.
imhd(iva)o! haha. :)
l8r! go TAR HEELS! go BRUINS!
diva
I'm with Roach, but I'm old and conservative in some ways about debt. We have a 31-yr old niece in Sarasota whose husband is a great cook with a lunch counter business in a quiet neighborhood. Her dad is rich. She commissioned two spec houses of the McMansion variety 8 months ago using liars' loans and the houses are just coming on the market today, and they bought a big house too which is interest-only payments. Another neice who's recovering from cancer has a 17-yr old daughter getting out of high school. 2nd niece is a school teacher, and has two root canals to pay for with no insurance. First niece called up 2nd niece and suggested kid go for a year in Europe, since all the European kids did that after high school. Roach is the Man!
Reason markets are trying to go up again are probably due to massive short term infusions of cash from Fed and Treasury, some $57 billion in last two days of last week, e.g. When the Big Boys are out, you'll get your chance too, when the credit dries up.
OldVet, I hear you. For the record, I'm in Roach's camp, but I recognize my bias is to gravitate toward that sort of dire predictions (I think I got it from my Dad). DNA proclivities aside, I do not believe for a minute that all of the sub-prime business is (1) contained and/or (2) already priced into the stocks.
In looking at 10-k's (and to tell you what a real nerd I am, I did find an error in a Moody's report and notified the company over the weekend), I've noted (and please forgive me if I'm repeating myself here...)that these folks' (mortgage companies/insurers) SEC filings are stating that their loan loss reserves are based on current delinquencies. Fact: Delinquencies are at an all-time low. Fact: the 2006 tranche of sub-prime loans were the worst and those haven't had time to fully blossom. ACA when out of their way on their conference call to discuss that. The credit spreads are widening too..so there is mark to market risk in portfolios held on balance sheets.
No, there is no way this is priced into the stocks because no one (no one that matters, I don't matter) is giving these topics full air. Who have you heard talking about market rate risk if interest rates go up? Who have you heard talking about losses on interest rate hedges if rates go down? I think that everyone is hedged for stasis...and I don't think that we are going to have stasis. (Remember, the homebuilders were not talking about asset write-downs in the summer). I don't mean to rant, but I think that the story still requires more unfolding--and I don't think there is any way that the market is smart enough to figure this out in such a short amount of time--look how long it took the market to figure out the homebuilders.
Frankly if someone offers up some plausible facts and probabilities to address these real concerns over which I still wring my hands I will be grateful for the conversation.
Roger, great blog.
Leisa, great comments the last few weeks.
Some weeks ago, there was discussion of why only the bears produce well-written pieces.
The title of this thread caused me to chime in. Just this weekend I received a new book: The End Is Not Nigh by GaveKal Research out of Hong Kong. Only $22 direct from their web site or Amazon.
Bullish, bullish, bullish, and against gold. I personally disagree with most of it, but what do I know? Certainly well written and has a lot of ideas you haven't heard elsewhere.
Well, Roach at least has it right that the answer isn't a flood of more liquidity. That just delays the day of reckoning to a more uncertain future.
The banks (and Morgan Stanley, et.al) have deep pockets, enough to easily weather this storm. I'm afraid that Greenspan conditioned everyone to expect liquidity bail-outs every time some problem loomed on the horizon. His last mistake was his biggest: no wonder assets got inflated. FREE MONEY!!!
I wouldn't be surprised to see a very tough housing market (and tough lending standards) for the next three years, especially in the most inflated markets.
That said, leave it alone, leave rates alone, and everything will recover it's balance. 5-8% rates are suitable for sustained economic activity - the exceess is just being ringed out.
Patience, friends, patience.
Jay Walker
The Confused Capitalist
Roger
Speaking of well written permabear articles - what do you think of James Grant's new bullishness on Japan and the Yen in his latest Forbes column.
OG
my thoughts about Japan have been the same for a long time. Years and years of wildly stimulative accomodative policy with no obvious result. From the top down that is reason to stay away from the equities for me. That does not mean the yen can't go up which I think it will.
Roger,
The majority of your market oriented posts are negative. I wonder about this alot. Seems most people want to think Doom and Gloom. Good things can't happen, that would be "too good". If I just started reading your blog, I would think you were short. But, I know, you will not pull the trigger until the market falls through it's 200day.
Why the Doom and Gloom? Politically motivated? I wonder.
The market just corrected a bit, but this pullback was so far from a serious correction....was it the start of one? Who's to say until we look back.
There are plenty of noteworthy people positive on the markets. Why not show the people?
g
George I may not be following you entirely but....
One thing I have said many times here is that I want to devote more study to what can go wrong because the things that can go right don't hurt client accounts.
At every turn, I hope anyway, I have tried to be clear that I expect a normal correction/bear market/recession primarily as a function of normal cyclicality but that I was not making a big bet in anticipation.
As far as political motivation I might not follow you completely but I am a libertarian with a very low opinion of all politicians and I should say devote very little time to political rhetoric, almost no time actually.
Through out this dip we just had I commented many times that this was not a big deal and that usually bear markets don't come as the result of scary two week periods in fact one reader said I was being complacent, lol.
Your last comment about show the people is totally lost on me, sorry.
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