The worst is over!

[santafe2]

I'm not sure what Kool Aid these folks are drinking but you can expect a lot more of this talk as the media gins up the monthly payment consumer to quit paying down debt and go shopping.

The worst U.S. recession since the Great Depression has ended...

"The great recession is over," said NABE President-Elect Lynn Reaser.

"The vast majority of business economists believe that the recession has ended...

Yup, it's over because the experts say so.

Much of the anticipated recovery was seen driven by businesses rebuilding their inventories after aggressively reducing unwanted stocks of unsold goods to match weak demand.

Let me get this straight. Business is going to "aggressively" reduce stuff they can't sell but they're going to buy a bunch of new stuff that no one will buy and that will drive the economy...then what?

The labor market was not expected to regain most the jobs destroyed in the current recession until 2012 or beyond.

"With improving credit markets, the U.S. economy can return to solid growth next year without worry about rising inflation," Reaser said.

Credit is coming back but not your job so quit your whining and crank up those credit cards and other revolving debt.

http://www.reuters.com/article/topNe...dChannel=11618

[Jim Nickerson]

Re: The worst is over!

sf2, was it not you who posted somewhere here that you placed a lot of confidence in ECRI when it came to your making investment decisions (whether is was regarding equity investing or investing in your business I definitely do not recall)?

If you read Achuthan and believe in his methods, then there is a recovery.


The Pessimists Are Wrong: No Downturn Anytime Soon, ECRI's Achuthan Says

http://www.rgemonitor.com/redir.php?...000&cid=386889

It's a V! Recovery "A Lot Stronger" Than Consensus, ECRI's Achuthan Says

Personally, everything I tend to believe is bearish, the problem is the equity markets have not bought into it yet.

[santafe2]

Re: The worst is over!

sf2, was it not you who posted somewhere here that you placed a lot of confidence in ECRI when it came to your making investment decisions (whether is was regarding equity investing or investing in your business I definitely do not recall)?

Yes, ECRI does a good job tracking turns and is still pointing to an upward moving economy and market. Personally, I don't think it will last through the winter. The Reuters article I posted appears to see this hand-off of government sponsored growth to business sponsored growth next year. But who are these business people that will be building inventory without an indication that consumers will resume spending?

And here's another article from yesterday that says consumers are now an even larger part of GDP than they were a year ago. Spending is down $195B last quarter but percent of overall GDP is up to 71%, (a post WW II record). So the US economy continues to shrink even faster than the consumer portion.

As the economy emerges from the downturn, most economists expect the consumption share to gradually shrink. "I fully expect the consumer share to drop. … But it'll take five to 10 years to happen," says Nariman Behravesh, chief economist of IHS Global Insight.

http://abcnews.go.com/Business/consu...ory?id=8805382

[meechpod]

Re: The worst is over!

Ralph Lauren - Forecasting The Collapse Of The Post Crash Bubble - Not.

Better Guard Against "thesis Chasing".

[ATTACH]2299[/ATTACH]

[santafe2]

Re: The worst is over!

Ralph Lauren - Forecasting The Collapse Of The Post Crash Bubble - Not.

Better Guard Against "thesis Chasing".

I'm afraid if one does not have a thesis, investing is just guessing. Basing investing decisions on the trajectory of RL is not something I would do. There are many macro level metrics one can use to judge the health of the economy and the likely outcome of markets over the coming 12 months.

As we sit today, we await the fall of commercial real estate. When banks cannot or will no longer hold this bad debt on their books, the banks will begin to move down again and with them the market.

This from last Wednesday's WSJ:

Banks in the U.S. "are slow" to take losses on their commercial real-estate loans being battered by slumping property values and rental payments, according to a Federal Reserve presentation to banking regulators last month. The remarks suggest that banking regulators are girding for a rerun of the housing-related losses now slamming thousands of banks that failed to set aside enough capital during the boom to cushion themselves when the bubble burst. "Banks will be slow to recognize the severity of the loss -- just as they were in residential," according to the Fed presentation, which was reviewed by The Wall Street Journal.

In another sign that many U.S. financial institutions are inadequately protected against potential losses on commercial real-estate loans, banks with heavy exposure to such loans set aside just 38 cents in reserves during the second quarter for every $1 in bad loans, according to an analysis of regulatory filings by The Wall Street Journal. That is a sharp decline from $1.58 in reserves for every $1 in bad loans from the beginning of 2007.

[medved]

Re: The worst is over!

I'm afraid if one does not have a thesis, investing is just guessing. Basing investing decisions on the trajectory of RL is not something I would do. There are many macro level metrics one can use to judge the health of the economy and the likely outcome of markets over the coming 12 months.

As we sit today, we await the fall of commercial real estate. When banks cannot or will no longer hold this bad debt on their books, the banks will begin to move down again and with them the market.

This from last Wednesday's WSJ:

My thesis is that govt awaits the same outcome and will arrange some preliminary strike against it (yet another bailout as a part of the second stimulus). The banks will not go down ever again. As long as this works, they will continue printing money and give it to their cronies. All the players (govt, congress, media, wall street etc.) are in agreement, and this is what matters.

The only danger, IMHO, is some big international event outside of the US control. This will bring a lot of disagreement inside and outside of G20. This where the biggest danger lies.