Dow rallies to over 8,000

[bascule]

:D THE STIMULUS IS WORKING LIKE A CHARM :D

 

http://www.smartmoney.com/Investing/Economy/Dow-8000-5-Reasons-Driving-the-Rally/

 

...or rather, WSJ's SmartMoney reports 5 reasons for the rally, including "Team Obama". Yes, specious reasoning aside, multiple forces are working to change the economy for the better. I'm really glad to see this.

 

Is this just temporary, or is the economy actually beginning to recover?

[Pangloss]

What, because of the stock market? Weren't we just saying a couple of months ago that it's not an accurate barometer of economic policy? (grin)

[jake.com]

I need the stock market to get back to about 10,000 so I can sell my portfolio.

[ParanoiA]

The stock market is obviously reacting to my announcement on my myspace page.

 

I don't think we're out of all of this yet, but it sure seems like we're moving uphill again. It would really be nice for the housing prices to come up in the next couple of months, I need to get out of this and move.

[Pangloss]

You and me both. I wish I were a first-time buyer -- those people are making out like bandits right now.

[Sisyphus]

You and me both. I wish I were a first-time buyer -- those people are making out like bandits right now.

 

Yes, yes we are. Prices in the city have finally peaked and are starting to decline, just as I'm seriously entering the market. This whole economic catastrophe has actually worked out very well for me in general...

[Pangloss]

Damn you Sisyphus!!! (shakes fist vigorously)

 

Hehe, grats man, that rocks.

[ParanoiA]

Yeah, congrats. And that's how it's supposed to work.

[jackson33]

:D THE STIMULUS IS WORKING LIKE A CHARM :D

 

http://www.smartmoney.com/Investing/Economy/Dow-8000-5-Reasons-Driving-the-Rally/

 

...or rather, WSJ's SmartMoney reports 5 reasons for the rally, including "Team Obama". Yes, specious reasoning aside, multiple forces are working to change the economy for the better. I'm really glad to see this.

 

Is this just temporary, or is the economy actually beginning to recover?

 

 

As said before, the Chinese economy which is tied to the US$ and a good share of trade is up again today, 50% over the past couple months (10k to near 15K). Also anything between 7-9k DOW is the current trading range, even if classified volatile.

 

http://moneycentral.msn.com/investor/charts/chartdl.aspx?showchartbt=Redraw+chart&D4=1&DD=1&D5=0&DCS=2&MA0=2048&MA1=0&CF=32&DB=1&DC=1&symbol=%24INDU&nocookie=1&SZ=0&CP=0&PT=7

 

What may be interesting is the 100 day MA, which the DOW is currently ignoring and activity IS on the increase. These could mean good things, but there are some bad things still pending....

 

This weeks FED Prime overnight was holding at .5%, while 30 year fixed home loans are around 4.25%, while money supply is increasing at an unrealistic pace (the value of goods/services compared to available money). As I understand the current theory, the FED will print money to cover all the current stimulus programs and/or expenses over the budget, removing it as the economy increases.

 

This leads to the Income Tax Revenues which are running about 25% below expectations and those expectations were already down from the time the Budget was based on, which indicated an acceptable 1.7T deficit. If that deficit is increased by a shortfall of 25% in overall revenue (likely), printing money will do nothing, borrowing impossible at current interest rates and hyper inflation will set in...IMO.

 

Now if the DOW or especially other exchanges (less reliant on foreign trade) continues to increase and individual company reports continue to beat expectations (really set low), it may mean an artificial crisis or that my worst fear was correct, it was never a major problem in the first place. That the confidence of the consumer, in turn business was manipulated into believing something (don't know what or why) that did not exist. For the record the blame would go to Paulson and the Federal Reserve and carried over by the current administration as an excuse for an agenda. If the quarterly reports continue report LESS than expectations (meaning today most are making nothing or losing) added to the above inflationary scenario, you are looking at DOW 4/5000, unemployment at 10/14%, inflation at 10-12% and probably no means to barrow anything by the end of THIS YEAR.

 

Obviously I hope a recovery is in progress, actions by Paulson did work with regards to Banks/Financial and the stimulus programs will enable many State and Local governments to recover from a year or two of lost tax revenues and a the trickle down will be back to the Federal, which will be forced to cease extreme spending...

 

Jake; I don't know your age, but IMO selling now (or at 10K) if held from highs of 18 months ago, would be foolish unless needed to live off. Two, five maybe it will take 10 years and a revolution, but the economy will recover. If it did not, whatever your dollar value is, would be meaningless or a small fraction to what the cost of living would be. I have maintained 10% of what little I have in silver bullion since the early 1990's, but would be hesitant to advise that today.

[bascule]

Now if the DOW or especially other exchanges (less reliant on foreign trade) continues to increase and individual company reports continue to beat expectations (really set low), it may mean an artificial crisis or that my worst fear was correct, it was never a major problem in the first place.

 

Do you honestly think that could possibly be the case?

 

All indications are this is one of the worst economic events since the Great Depression.

 

I sincerely doubt this is going to be a case of everything magically being fine.

 

That the confidence of the consumer, in turn business was manipulated into believing something (don't know what or why) that did not exist.

 

By who, and for what purpose? Was Bear Stearns involved? Or Lehmann Brothers? We're seeing centuries old financial institutions evaporating overnight.

 

For the record the blame would go to Paulson and the Federal Reserve and carried over by the current administration as an excuse for an agenda.

 

What agenda, destroying the American economy? You sound like a conspiracy theorist.

 

If the quarterly reports continue report LESS than expectations (meaning today most are making nothing or losing) added to the above inflationary scenario, you are looking at DOW 4/5000, unemployment at 10/14%, inflation at 10-12% and probably no means to barrow anything by the end of THIS YEAR.

 

Sadly this seems like a much more likely scenario than the other you proposed...

 

Obviously I hope a recovery is in progress

 

...that would be my expectation. A slow, gradual progression out of the crisis with its own fair share of ups and downs.

 

All this said, what does this say about "the markets giving a vote of confidence" to the current administration's plan? I'm certainly not suggesting they are primarily responsible... the SmartMoney article alone cites 5 different factors, and that doesn't even include the good news at Wells Fargo. All that said, it would appear that the financial ice may be starting to thaw, and the money is beginning to flow again...

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Merged post follows:

Consecutive posts merged

What, because of the stock market? Weren't we just saying a couple of months ago that it's not an accurate barometer of economic policy? (grin)

 

Anyone who doesn't think the economy is f*cked up at this point is a pedantic ass f*cking retard

[jackson33]

As I have said on other threads, Bush was the first President to my limited knowledge to declare an economical crisis with anything close to a 700B possible fix. We have had a good many bubble burst over the years, with a much higher cost to the 'Private Sector', the Tech 2000 for instance was well into the trillions, with no Federal involvement. Hundreds of High Tech Companies closed their doors, filing chapter 13, millions lost their jobs and investor/bankers suffered tremendous losses and I'll add have never recovered those losses from Tech.

 

Then I rememberer an interview with Reagan, after '41' had won his election saying he "had done everything right", ending the comment with "and helping getting a republican elected". GWB was at that interview, and I've wondered if he took that personal, trying to help McCain being elected and went along with what may have been a political stunt. I can't and won't pursue getting the dots in order, but other facts have bothered me with Paulson's connection to China, Banking, the Federal Reserve and lately now the Revelation that many if not most banks wanted nothing to do with TARP money. I don't think it was anybodies intent to destroy the economy or even have it disrupted to near what actually happened. I do think Emanual and Alxlerod could have advised differently, simply holding off social programs and encourage the markets (private sector) and whatever bad is ahead, could have been avoided.

 

The market is simply trading in a range, which is based on felt future events. In this case and as of last Thursday, not very much is going to happen. I have played it from 7000 to 8000 but will probably pull back later next week, pending the Teabag Demonstration results on Wednesday. You asked if this gain, which is at best a minor gain back of a tremendous loss, was temporary?

In short my response was as before; It's all up the the US Congress and the current Administration. Think you already know my feelings on which actions or lack of actions will move the markets, either below 7k or above 9K...

[Phi for All]

While there was no single source for our present woes, I'm beginning to think the sharp increase in gas prices last summer had a LOT more to do with the downturn than I previously thought. The Fed couldn't quite figure out the housing bubble problems, but they knew what to do when gas prices rose. When you couple the resulting interest rate increase with the fact that people who already had shaky mortgages, mostly for properties that were farther away from their workplace, had to choose between buying $4/gallon gas to drive twice as far or paying their mortgages, it seems oil owns a bigger share of the blame than I had previously thought.

[Pangloss]

From the Sunday talk show "This Week" on ABC today:

 

George Will: "The Dow has predicted nine of the last three recessions."

 

Paul Krugman: "... and six of the last one recovery!"

[iNow]

Was it George Will who said that, or Newt Gingrich? I don't recall, but I thought the exchange was with Krugman and Gingrich. I was still sipping on my coffee though, so could very well be wrong.

[Pangloss]

I thought it was Will, but Gingrich had some interesting exchanges with Krugman as well. That whole show was a little odd this week from the get-go (with that last-minute Rick Warren cancellation), and at least part of that piracy discussion was rendered moot 45 minutes after it aired by the developments off the coast of Somalia. An off week, I suppose, but I think I actually like the Round Table better when they stray off their prepared statements a bit (like the way Huffington got smacked around last week).

[jackson33]

While there was no single source for our present woes, I'm beginning to think the sharp increase in gas prices last summer had a LOT more to do with the downturn than I previously thought. The Fed couldn't quite figure out the housing bubble problems, but they knew what to do when gas prices rose. When you couple the resulting interest rate increase with the fact that people who already had shaky mortgages, mostly for properties that were farther away from their workplace, had to choose between buying $4/gallon gas to drive twice as far or paying their mortgages, it seems oil owns a bigger share of the blame than I had previously thought.

 

No doubt, Gas/Diesel prices have played a roll in the decline of consumer activity in the US and the World. Bush after Gas dropped below 2.00/gallon, said it meant 2,000 per family per year in savings, so suppose it likewise meant 2,000 per over year increased cost when over 4/gallon. Additionally, truckers were adding a surcharge to each mile of transport, which hurt business as competition wouldn't allow passing on those cost. Wal Mat for instance owns it's own Trucking Company.

 

What may be more troubling and remains an issue, is outflow of American dollars from the economy for the final product (much being refined over seas today) or the price of raw crude to be refined. I'll let T. Boone Pickens explain this, but over 2/3rds the cost of US Transportation Fuel Cost goes directly to a foreign supplier...

 

http://www.rttnews.com/Content/AllEconomicNews.aspx?Node=B2&Id=873989

 

Keep in mind this was based on 40-45 dollar/barrel in February 2009 and crude has reached 126.00 recently...

 

http://inflationdata.com/Inflation/Inflation_Rate/Historical_Oil_Prices_Table.asp