We are in what suspiciously appears to be a smoke and mirrors economy. This to me doesn't make sense. 600,000 jobs lost, sixteen year high unemployment, and the dow goes up 210 points today, after another rally yesterday?
And guess which DOW component stocks climbed? Banking stocks CITI, B of A, and JPMorgan Chase. To me, this seems like the treasury is buying banking stocks. I have been watching the DOW in all of this crazy flood of bad news, and it mysteriously stays propped up at 8,000. The banks aren't lending, and this is how they make money, so what justifies a 7% increase in value today???
I am hearing of so many people losing jobs - I get a lot of IM's on Facebook. Stocks are another asset bubble, and I am very concerned with asset bubbles.
11 comments:
you should not give advice on something you don't understand.
Layoff have always typically raised stock prices
less employees = lower expenses = higher (or in the case) margins maintained = good for the stockholder.
companies are becoming more efficient with less workers. productivity numbers are way up
actually, record unemployment numbers are a sign of a financial meltdown. This should not lead to higher stock prices.
In many people's opinions stock prices are beaten down too low the P/E ratios are bargains.So if you believe that the economy is going to turn around faster than 45-90 years, which everyone I know except for one person thinks ;) this is a good time to buy low and have the ability at some point to sell high.
Not to mention this MASSIVE stimulus package which people apparently also think is going to help the economy.
I have a question, assuming you really believe that this recession is bad as you say it is, and that you really think that it is going to last 45-90 years, I don't think you actually do however if you do, realistically you have a good change of being dead before the economy turns around. So are you giving up. Are you not going to try and invent anything new. You paint such a gloom and doom picture, that clearly no one is going to spend any money, or even have any money, or a job, or a camera, or anything besides hopefully a tent in the woods and a fishing pole. So is gary fong industries shut down with hope that your f-u money and stash of gold can ride you into the sunset?
Buy the rumor sell the news. The number one thing your missing is that markets are supposed to make sense. They often do not and if the plunge protection team is involved you can expect a rally. I believe in the efficient market hypothesis theory is that all information is reflected in the price of an asset. Last couple of days the overall market has rallied because of the liklihood of the stimulus being passed.
Stimulus will pass and the market will fall. By the rumor sell the fact. We shall see next week.
I agree with the picture Jared paints of Gary on his second post. It seems to me that Gary is a little too doom and gloom. I do think we are going through a mini depression and all this money printing will lead to higher interest and inflation in the future. That's my 8 cents. Peace out.
http://www.youtube.com/watch?v=qDC0qcf0kzE
This sponsor an executive video is hilarious.
well I mean that the U.S. won't recover for 45-90. Japan is coming into 20 and it seems like a moment in time when they were cranking.
Canada is resource rich, so that's why I went there. China will be fine too. This is a process of creative destruction. The world will move away from using the USD as the reserve currency (by the drumbeat at Davos).
The world is a level playing field. With 1/2 of the world earning less than $2 a day - and becoming energized with technology and emerging middle classes - I just don't see where the U.S. has a competitive advantage.
Emerging companies will have a hell of a transition turning into inventors with protected property rights, and bringing up that culture. But I remember the news clips coming in from China when Nixon went in - everybody in Shanghai riding bicycles amidst a backdrop of Chairman Mao, and wearing uniforms.
Now I can check into the Four Seasons Shanghai, be picked up at the airport in a Mercedes S class and when I get to my room, turn on CNN International.
I think everyone here has valid points. With the amount of hedge-funds, short selling, and the mass publicity surrounding the market now days, things are not the way they were years ago. The adage of "buy on the rumor, sell on the news" is very true. I personally think the reason the market (and the banks) did well on Friday was because of the stimulus package that is going to be voted on.
Although, I share some of Gary's concerns, the US has tended to show a remarkable ability to carry on. Unfortunately, I think this isn't going to be a quick fix. Before this is all over, there is a good chance the banks will essentially be nationalized. The Government will end up essentially taking on the bad assets and privativing the good. The bad news - more debt.
As for unemployment, I am a little torn. When everyone is laying off, it gives corporate America a green light to follow in step, even if the layoffs are not needed. It has now become the expectation, not an abnormality. The upside as Jared pointed out is that it will give companies the opportunity to increase revenue and earnings.
On the flip-side, if things continue to spiral badly, Gary's comment about the dollar not being the currency of choice is a real possibility. This would have broad reaching ramifications. Particularly it would be harder to issue treasuries and limit the ability of the FED.
Long story short, I deeply hope that we have the right people in place to guide us through a mess that should never have gotten this out of control!!!
INFOWARS.COM
"The world is a level playing field. With 1/2 of the world earning less than $2 a day - and becoming energized with technology and emerging middle classes - I just don't see where the U.S. has a competitive advantage."
I am clearly missing something. If half of the world is earning less than $2/day, and in the US the average is $110/day you consider that a level playing field? (Canada is around $26/day)
Maybe I am missing something but I have yet to read any stories of anyone hiding out in a cargo ship looking for the "china dream", and rafts seems to stop at america.
I think we differ on to major points.
1. That the dollar is going to fall apart. The only thing to shine during this whole fallout was the dollar, gold should be in the several thousands by now, but nothing. I personally just don't see anything happening to the dollar. This idea that no one wants to buy it to me is crazy. The US is by far the safest place to put your money, hands down, there is nowhere even close. It seems like you think only the US is in a recession.
2. You think that america is going to sit back and do nothing, and let Canada become a superpower. As I've said before, US GDP can be cut in half, and we would still be twice as big as China. And I can assure you that if our GDP was cut in half, that China's GDP is not going to go up.
We are not going to just sit back and do nothing and let everything fall apart. It's just not going to happen. To think the US is just going to have a major collapse is insane.
You seem to have a few conspiracy theories that you believe in such as this plunge protection force, and gold price fixing conspiracy. If you really believe in those things, don't you think "the man" is going to do something to protect the US? If the US is going to go to the lengths to prop up the stock market, and keep gold down, why are they going to stop and let Canada take over.
What would stop of from just taking over Canada?
You like crazy predictions, so I predict that the US will take over Canada before China takes over the US in GDP
China Says 4,000 Toy Companies Close as Recession Cuts Demand
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By Paul Panckhurst
Feb. 8 (Bloomberg) -- More than 4,000 Chinese toy companies closed last year as the global recession cut demand and some countries tightened safety standards.
Toy exports rose 1.8 percent in 2008, 18.5 percentage points less than the gain in 2007, the official Xinhua News Agency said yesterday, citing a customs report.
China’s exporting collapse and the economic slowdown have cost the jobs of 20 million migrant workers, raising the risk of social unrest as the government rolls out a 4 trillion yuan ($585 billion) stimulus package to boost investment and consumption. Sacked workers rioted at a toy factory in Guangdong province in November.
“It is difficult for China to revive exports on its part, when consumption in major economies has stalled,” said Sherman Chan, a Sydney-based economist at Moody’s Economy.com. A “pressing need to avoid a surge in bankruptcies and unemployment” means the government should do more to tap domestic demand, she said.
Chen Xiwen, a senior rural planning official, warned this month of the risk of “mass incidents and social unrest” as jobless migrants return to the countryside. China is cutting export taxes to help manufacturers and has halted gains by the yuan against the dollar as demand dries up.
(The US lost 2.6 million jobs in 2008 vs 20 million in China, due to them not being able to export to the US and other Countries)
"Canada’s dollar declined as a government report showed employers cut 129,000 jobs in January, more than three times expectations, fueling concern that the country’s economy is deteriorating."
"The monthly job losses were the largest since the methodology of the employment survey was last changed in 1976, Statistics Canada said today in Ottawa. The jobless rate rose to 7.2 percent, a four-year high, from 6.6 percent in December. Economists surveyed by Bloomberg expected that employers would cut 40,000 positions, the median forecast.
Canadian Finance Minister Jim Flaherty yesterday warned that the employment data would likely be “regrettable,” and suggested the government may need to implement another stimulus package because the economy is deteriorating. This is Canada’s first recession since 1992, and the economy will contract 1.2 percent this year, according to the Bank of Canada."
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