Dr. Marc Faber on Lateline Business - Aug. 26, 2009 (9min.)

[LargoWinch]

Dr. Doom alright. :eek:

Runtime: 9min.

[D-Mack]

Re: Dr. Marc Faber on Lateline Business - Aug. 26, 2009 (9min.)

Pretty optimistic if he thinks the system will hold 5-10 years.

[marvenger]

Re: Dr. Marc Faber on Lateline Business - Aug. 26, 2009 (9min.)

i'm buying a farm

[doom&gloom]

Re: Dr. Marc Faber on Lateline Business - Aug. 26, 2009 (9min.)

i'm buying a farm

http://online.wsj.com/article/SB125138431827963711.html

• AUGUST 28, 2009

Recession Finally Hits Down on the Farm

• Article

BY SCOTT KILMAN AND LAUREN ETTER

The American farm, which has weathered the global recession better than most U.S. industries, is starting to succumb to the downturn.
The Agriculture Department forecast Thursday that U.S. farm profits will fall 38% this year, indicating that the slump is taking hold in rural America. Much of the sector had escaped the harsher aspects of the crisis, such as the big drop in property values plaguing city dwellers and suburbanites.

[Jim Nickerson]

Re: Dr. Marc Faber on Lateline Business - Aug. 26, 2009 (9min.)

Pretty optimistic if he thinks the system will hold 5-10 years.

I thought the video was pretty good on one hand because of the dersision with which Faber holds the Fed.

He made the point that banks might be a good investment now because when they can borrow at zero and lending at anything above that it must be profitable--perhaps others understood him differently.

What the FOMC and Treasury and actually everyone in Washington is trying is to re-inflate the economy back to as close to where it was before the crash in 2008--a debt laden consumer accounting for 70% of GDP. It is the possibility of that working for a while that I believe leads Faber to suggest that things could again go back up for some years (despite the foundation of such expansion not having any firm basis).

Here's a bit out of Barron's today from BMO Capital Markets (Toronto)
http://online.barrons.com/article/market_watch.html

Aug. 19: Sen. Johnny Isakson, Republican of Georgia (formerly in the real-estate business), continues to introduce legislation to: increase the maximum [home-buyer's] tax credit from $8,000 to $15,000; expand the credit to apply to any buyers, regardless of income or first-time status; and to extend the tax credit for one year from the enactment date....With its strong Republican backing, there is nary a word about the program's cost....The Joint Committee on Taxation estimate[d Isakson's] proposal would reduce cumulative federal budget receipts for fiscal years 2009-'14 by about $38.5 billion. Yet arguably, the impact on the federal deficit would be smaller to the extent that the tax credit boosts economic activity sufficiently to reduce economically sensitive components of government spending, such as welfare payments or unemployment insurance.

Bottom line: The cash-for-clunkers program has been so successful that we can expect to see expanded positive incentives for targeted consumer spending. The opportunity to extend the expiring first-time home-buyer tax credit would be a huge political win for the Republicans and hardly a Democrat will stand in its way. An expanded and enlarged home-buyer tax credit could well trigger an unexpectedly large boost to housing demand at a time when mortgage rates are still low and pent-up demand is high. It would not only boost first-time buyer demand, but would also jump-start the move-up and retirement-home markets as well.

Housing is the most interest-sensitive sector of the economy and...the traditional transmission mechanism for monetary policy. It could well be an important transmission mechanism for fiscal stimulus through a broadened and extended home-buyers' tax credit. Home-buying also leads to...expenditures like furniture and appliance purchases, painting and other upgrades, and energy-efficiency spending. The positive impact on the overall U.S. economy could be large.

-- Sherry Cooper

It seems to me the entire goddammed effort out of Washington is to continue enticing dumbasses to take on more and more and more debt. I guess we'll get to see if the average adult American has shit for brains or can actually act in what might be his/her better long-term interest.

[Jim Nickerson]

Re: Dr. Marc Faber on Lateline Business - Aug. 26, 2009 (9min.)

S&P 500 May Surge 40% in Duplication of Japan: Chart of the Day 8/28/09

http://www.bloomberg.com/apps/news?p...d=aKzgH4hvhh.g

By Alexis Xydias
Aug. 28 (Bloomberg) -- U.S. stocks are behaving like Japanese equities in the 1990s, meaning the Standard & Poor’s 500 Index may return 40 percent in the next year, according to Bank of America Corp.

The CHART OF THE DAY shows the Nikkei 225 Stock Average since 1980 and the S&P 500 during the past two decades, when adjusted for currencies. The Nikkei doubled between October 1998 and April 2000 in dollar terms, as the chart illustrates. The S&P 500 has risen 34 percent since March when the Dollar Index, a measure of the dollar against currencies in six major U.S. trading partners, is factored in.

A “melt-up” rally in the U.S. may be triggered by central bankers keeping interest rates near record lows, an economic recovery or an undervalued dollar, Bank of America strategists wrote in an Aug. 26 report.

“Even in economies overcoming credit booms, rallies can be powerful and last much longer than you think,” Bank of America’s Sadiq Currimbhoy, Arik Reiss and Jacky Tang wrote. Should the similarity between the U.S. and Japan persist, the S&P 500 will keep rising, partly because of gains in the dollar, the Hong Kong-based strategists said.

“If there is one persistent similarity between Japan and the U.S., it is they both seem to be fighting a debt problem by producing more debt,” they added. “So, for equity investors, if these relationships were to repeat themselves, the risk for the U.S. market is that like Japan, the stock market ends up with big rallies and then sell-offs.”

When adjusted for currencies, the Nikkei 225 peaked in December 1989, while the S&P 500 reached its high in September 2000. Following its jump through 2000, the Nikkei retreated three years. On the vertical axis of the Chart of the Day, 100 corresponds to the Japanese index’s record high.



I believe the graph above is the one referenced in Bloomberg article, I got the graph from http://paul.kedrosky.com/

I'm not posting this as an argument that the SPX now has further to run, but rather to point out, based on history, it is possible.

[magicvent]

Re: Dr. Marc Faber on Lateline Business - Aug. 26, 2009 (9min.)

This does not line up with the Nikkei offered by EJ

http://www.itulip.com/forums/showthread.php?p=112044

[Jim Nickerson]

Re: Dr. Marc Faber on Lateline Business - Aug. 26, 2009 (9min.)

This does not line up with the Nikkei offered by EJ

http://www.itulip.com/forums/showthread.php?p=112044

If it doesn't line up with EJ's thinking, then your obvious conclusion can only be it is wrong, is that correct?

The graphs are aligned based on the 1989 Nikkei high and the US SPX high and then going back 10 years. The point of the article quoted is to support the possibility of a continuation of the current US equity rally based on the previous behavior of the Japanese market. The report does not state that the the US market's will continue to go up from their present rises.

I put up the article to support Faber's apparent recognition that the current rally could go on for a while.

I take it that much of the conventional thinking at the moment is that the US markets are fast approaching a top after which the bear market will resume. Fundamentally, I can buy into that. Robert Prechter and now Doug Kass have within the last month to few days made such bearish calls. http://www.ritholtz.com/blog/2009/08/kass-call-top/
and http://www.thestreet.com/story/10590...ly-topped.html

I surely do not know who will turn out to be correct.

[bpr]

Re: Dr. Marc Faber on Lateline Business - Aug. 26, 2009 (9min.)

This does not line up with the Nikkei offered by EJ

http://www.itulip.com/forums/showthread.php?p=112044

EJ's chart starts the Nikkei in 1989, just before the onset of recession.

The Bloomberg/BAC chart starts in 1980 and adjusts figures to dollars, ignoring political or economic events.

The CHART OF THE DAY shows the Nikkei 225 Stock Average since 1980 and the S&P 500 during the past two decades, when adjusted for currencies. The Nikkei doubled between October 1998 and April 2000 in dollar terms, as the chart illustrates. The S&P 500 has risen 34 percent since March when the Dollar Index, a measure of the dollar against currencies in six major U.S. trading partners, is factored in.

[magicvent]

Re: Dr. Marc Faber on Lateline Business - Aug. 26, 2009 (9min.)

I was hoping EJ would weigh in and provide additional analysis on his chart.

[goadam1]

Re: Dr. Marc Faber on Lateline Business - Aug. 26, 2009 (9min.)

Dr. Doom alright. :eek:

Runtime: 9min.

"is there anything you can tell me that could possibly derail your incredibly pessimistic scenario?"

"uh...no."


ha ha ha. lol. omg. hilarious.

And I agree. And EJ agrees. Do we want to quibble wabout a chart line up or a date on the scenario timeline? Mild meltdown. Print. Print Print. Horrible melt up. War or more war, depending on how you look at it. Or a positive black swan. Or a negative black swan. Whatever, the pieces are in play and the game is clear to itulipers.