Financial headlines today were highlighting a group of economists whose consensus forecast is that the recession will be over by the end of September.
This is astonishing to even entertain, considering the same people forecast a soft landing in 2007 and early 2008, then finally officially declared the US was in recession in November of last year. This awakening after a full year of pain and suffering, 30-60% declines in most American’s retirement accounts and net worths, and the most voracious declines in stocks, real estate, and commodities in 70+ years. Continue reading
We suspect if you look hard enough, you will find someone with a distorted enough view of right and wrong to believe that treating alcoholism with beer might work. However, most clear thinking adults would find it crazy. It’s interesting how differently those same clear thinking adults, including economic and financial experts and government officials, believe they can treat our current state of “shopoholism” with more credit. After all, all the bailouts and programs announced in the past year are just that…PROGRAMS TO STIMULATE OUR USE OF CREDIT AND LEVERAGE. The only treatment strategy I can think of that is related to the programs announced to date is one called aversion therapy. This involves taking an addict and their vice, and forcing them to ingest so much of the toxin in question that it makes them physically ill. So ill that the future sight, smell, of even thought of that vice causes the same physical illness conditions as the actual vice itself. The past couple years up until 2007 were like that; more credit than we could handle. Continue reading
All the media metaphors about green shoots and crocuses and new life as Spring blooms are nothing more than a recipe for DENIAL SALAD WITH DISASTER DRESSING! Anyone that has a lawn and garden knows that if you put enough fertilizer and iron on a patch of brown grass and water it, it will turn green for a few weeks. But, if the soil isn’t tended to, and the grass-killing bugs left to their own accord, the color will soon return to ugliness. Continue reading
NOW: The government is blowing the chance to finally tell the truth this week, and the market will respond with selling. The stage was finally set for truth about the banks via the stress test results, but the opportunity is being blown. Leaks about stress results all week have spurred a “hope” rally all month. The crowd was buying in anticipation of hearing bad news on the banks, which we all know is the truth. Just give it to us straight is that the rally’s message is to the government. But, NO, like usual, we’re being “handled” like naive children, and the data that is coming out is so obviously manipulated, that the only response we’ll be left with will be to sell into lies. If there was ever a time for the ugliest truths to be told, it’s now. We’re all ready for it, and don’t really care how bad it is, as long as we’re being informed. However, “they” are so used to having to lie to us that they will blow this historical opportunity to sit “with us”, rather than against us. Continue reading
The bank stress test results due out Thursday are the perfect catalyst for extreme market movement. Although we believe this will to the downside, anything is possible, especially with a government so “invested” in the upside (with their new equity ownership of the financial and auto industries). Continue reading
The good news is that the crowd is afraid of NOT being in the market, like they were a few months ago about being in the market. The bad news is that the market is now so caught up in not “under performing” that stocks are being bought for no other reason than the “hope” that they’ll go higher. Unfortunately, HOPE IS NOT AN INVESTMENT STRATEGY! Continue reading