The housing hurricane... we're through the eye now...
http://online.barrons.com/article/SB124303112018248371.html
MiB: Bill Miller IV, CIO, PM, Miller Value Fund
3 hours ago
Friday, May 29, 2009
Monday, May 25, 2009
May 25 - Tidbit Of The Day
And today finds us discussing the correlation between unemployment rising and foreclosures rising.... common sense, right? Yet supposedly real estate has hit a bottom if you listen to the talking heads.
http://www.ritholtz.com/blog/2009/05/job-losses-foreclosures/
http://www.cnbc.com/id/30929084
Two, two, two articles today.
http://www.ritholtz.com/blog/2009/05/job-losses-foreclosures/
http://www.cnbc.com/id/30929084
Two, two, two articles today.
Sunday, May 24, 2009
Where To From Here Uncle Iggy?
Gather 'round boys and girls and let Uncle Iggy tell you a tale...
There once was a thriving economy, booming in fact. For about a quarter century all was well. Sure there were a couple of hiccups here and there. After the turn of the century there was a downturn that worried many, but alas Americans bounced right back as usual. Another meteoric rise came and the stock market matched it's previous peak in 2007. What had gotten us to that point however is being proven to be smoke and mirrors. Banks (and individuals) over leveraged themselves by borrowing too much and expecting the good times to continue to roll forever.
We all know what happened beginning in late 2007 until March of 2009. Since that lowest of lows in March we've heard the term "green shoots" and other euphamisms to sound the alarm that the good times are coming back.
Folks, think... how can we get back to where we were if unemployment has almost doubled, there are 19 million empty houses out there and those that still have a job and a house are finally starting to pay off debt and actually add to savings?
Sure, America will claw it's way back... eventually. We're in for a few years of wild swings and overall flatness in the markets though. We saw a very serious low hit in March. We'll see a nice bounce, such as we've seen the past 2 months. An even more impressive bounce is even possible as hope springs eternal.
But... where to from here? There are two options. Up or down. Helpful huh?
Well we're due for a pullback. The question is how much? S&P at 887 right now after peaking at 930 a couple of weeks ago. 5% retracement so far. A pullback to the 800-830 range would actually be healthy for the markets and could stimulate another rally. S&P to 1100 (give or take 100 points) is an ultimate target for the current wave we're in.
But... only the market knows what it wants to do and it never tells us in advance.
I'm leaning towards my scenario above with about an 80% probability based my crystal ball guesstimate. The other 20% is clinging to the thought that we may get close to or exceed the lows we set in March (S&P 666) over the course of the next month or two..
My retirement is sitting and waiting. It's getting bored. It's angry that it missed out on a chunk of the recent rally but it's trying to be patient. It's also being cautious...
No matter what the short term does, new lows are coming. I can and will state that with total conviction. 2010 or 2011 will be very unpleasant.
A starting point of a list of things that will cause the next leg down:
1) Residential real estate (yes, it'll continue to decline in price)
2) Commercial real estate (just beginning to be a major issue)
3) City, county, state entities (tax revenues way down)
4) Unemployment, no quick turn around
5) Pension funds getting hammered, thereby affecting retirement
6) Banks far from healthy
7) Inflation... potentially massive inflation (in a couple of years)
There once was a thriving economy, booming in fact. For about a quarter century all was well. Sure there were a couple of hiccups here and there. After the turn of the century there was a downturn that worried many, but alas Americans bounced right back as usual. Another meteoric rise came and the stock market matched it's previous peak in 2007. What had gotten us to that point however is being proven to be smoke and mirrors. Banks (and individuals) over leveraged themselves by borrowing too much and expecting the good times to continue to roll forever.
We all know what happened beginning in late 2007 until March of 2009. Since that lowest of lows in March we've heard the term "green shoots" and other euphamisms to sound the alarm that the good times are coming back.
Folks, think... how can we get back to where we were if unemployment has almost doubled, there are 19 million empty houses out there and those that still have a job and a house are finally starting to pay off debt and actually add to savings?
Sure, America will claw it's way back... eventually. We're in for a few years of wild swings and overall flatness in the markets though. We saw a very serious low hit in March. We'll see a nice bounce, such as we've seen the past 2 months. An even more impressive bounce is even possible as hope springs eternal.
But... where to from here? There are two options. Up or down. Helpful huh?
Well we're due for a pullback. The question is how much? S&P at 887 right now after peaking at 930 a couple of weeks ago. 5% retracement so far. A pullback to the 800-830 range would actually be healthy for the markets and could stimulate another rally. S&P to 1100 (give or take 100 points) is an ultimate target for the current wave we're in.
But... only the market knows what it wants to do and it never tells us in advance.
I'm leaning towards my scenario above with about an 80% probability based my crystal ball guesstimate. The other 20% is clinging to the thought that we may get close to or exceed the lows we set in March (S&P 666) over the course of the next month or two..
My retirement is sitting and waiting. It's getting bored. It's angry that it missed out on a chunk of the recent rally but it's trying to be patient. It's also being cautious...
No matter what the short term does, new lows are coming. I can and will state that with total conviction. 2010 or 2011 will be very unpleasant.
A starting point of a list of things that will cause the next leg down:
1) Residential real estate (yes, it'll continue to decline in price)
2) Commercial real estate (just beginning to be a major issue)
3) City, county, state entities (tax revenues way down)
4) Unemployment, no quick turn around
5) Pension funds getting hammered, thereby affecting retirement
6) Banks far from healthy
7) Inflation... potentially massive inflation (in a couple of years)
Thursday, May 21, 2009
May 21 - Tidbit of the Day
Today's cheery words are about what the Fed is doing and the possible effects.
http://thehousingtimebomb.blogspot.com/2009/05/feds-fiasco.html
http://thehousingtimebomb.blogspot.com/2009/05/feds-fiasco.html
Eye Of The Storm
And no I'm not talking about the Carolina Hurricanes... however... cheer 'em on!
This is how I've been describing this economic storm to people. The initial bands of rain and wind have hit us hard and we are in the direct path of the storm. It just so happens that the eye of the storm is over us now. Calm winds, blue sky. It appears everything is over... but...
http://www.cnbc.com/id/30847981
This is how I've been describing this economic storm to people. The initial bands of rain and wind have hit us hard and we are in the direct path of the storm. It just so happens that the eye of the storm is over us now. Calm winds, blue sky. It appears everything is over... but...
http://www.cnbc.com/id/30847981
Wednesday, May 20, 2009
We've Seen The Bottom?
If you start to think that we've seen the bottom based on the 37% rally from the bottom in March, take a look at this chart. It shows the decline during the 1930's. Note the size of the rallies that occured repeatedly.
http://content.screencast.com/users/Powerpak59/folders/Jing/media/066ab672-cf8c-424c-ae41-e728bd0752c9/2009-04-11_0807.png
http://content.screencast.com/users/Powerpak59/folders/Jing/media/066ab672-cf8c-424c-ae41-e728bd0752c9/2009-04-11_0807.png
May 20 - Tidbit of the day
http://www.businessinsider.com/david-rosenberg-the-short-covering-rally-is-finished-here-comes-the-leg-down-2009-5
Key paragraph in the article:
The fact that the best performing stocks were the ones with the lowest quality ratings and with the largest short interest says a lot about the nature of this rally as well — the 50 heaviest shorted stocks tripled the advance among the 50 least shorted stocks — that its sustainability is in doubt. In other words, this was a rally built largely on short covering, pension fund rebalancing and the emergence of hope wrapped up in ‘green shoot’ data points.
Key paragraph in the article:
The fact that the best performing stocks were the ones with the lowest quality ratings and with the largest short interest says a lot about the nature of this rally as well — the 50 heaviest shorted stocks tripled the advance among the 50 least shorted stocks — that its sustainability is in doubt. In other words, this was a rally built largely on short covering, pension fund rebalancing and the emergence of hope wrapped up in ‘green shoot’ data points.
Tuesday, May 19, 2009
May 19 - Tidbit Of The Day
I'm going to start posting news stories, blog posts or other tidbits of information I come across that I find to be of interest. I'll only post the best of the best.
Here it is for today:
http://globaleconomicanalysis.blogspot.com/2009/05/effect-of-household-deleveraging-on.html
Here it is for today:
http://globaleconomicanalysis.blogspot.com/2009/05/effect-of-household-deleveraging-on.html
Sunday, May 10, 2009
La la la - Typing To Myself
I haven't bothered with an update lately because best as I can figure, I'm the only one reading what I type. :-)
Anyway... the good news is my overall call of the S&P going to 650 (it hit 666) and subsequent move up to 1000 (at 930 right now) was absolutely right. The bad news is it didn't happen as I had pictured, therefore I missed a good chunk of the move. I NEVER expect a straight line up without a decent pullback. It's been crazy. Truly insane based on normal behavior of the market.
What's next? Damned if I know. I'm still sitting on the sidelines. I don't dare get back in at this point. This rally had no basis. Purely a "hope" rally. Hope that things are bottoming, hope that things are turning around in the economy. Grasping at straws is more like it in my opinion. The bank stress tests were rigged. News this weekend states that the banks "negotiated" with the fed to lower what was expected of them by half, or more. Unemployment news was good?!?!?!? "Only" 540,000 jobs lost in April? Well if you ignore the fact that Feb and Mar numbers were revised worse, sure it could be construed that way. Wait til next month when the April numbers are revised worse.
I'm fine just waiting. Sure, I wish I'd caught more of the 30% rally with the retirement money, but I know, without a doubt that we're far from being done with all of this. I'll have my chances in the future.
Have a good day Scott. Thanks Scott, you too.
Anyway... the good news is my overall call of the S&P going to 650 (it hit 666) and subsequent move up to 1000 (at 930 right now) was absolutely right. The bad news is it didn't happen as I had pictured, therefore I missed a good chunk of the move. I NEVER expect a straight line up without a decent pullback. It's been crazy. Truly insane based on normal behavior of the market.
What's next? Damned if I know. I'm still sitting on the sidelines. I don't dare get back in at this point. This rally had no basis. Purely a "hope" rally. Hope that things are bottoming, hope that things are turning around in the economy. Grasping at straws is more like it in my opinion. The bank stress tests were rigged. News this weekend states that the banks "negotiated" with the fed to lower what was expected of them by half, or more. Unemployment news was good?!?!?!? "Only" 540,000 jobs lost in April? Well if you ignore the fact that Feb and Mar numbers were revised worse, sure it could be construed that way. Wait til next month when the April numbers are revised worse.
I'm fine just waiting. Sure, I wish I'd caught more of the 30% rally with the retirement money, but I know, without a doubt that we're far from being done with all of this. I'll have my chances in the future.
Have a good day Scott. Thanks Scott, you too.
Subscribe to:
Comments (Atom)
.jpg)
