Mortgage rates have skyrocketed (because the U.S. Treasury market got smoked), leaving mortgage applications to decline smartly.
And,
Now these are fairly important macro events, yet the U.S. equity market is trending steeply upward. Its times like this that I wish I were a momentum trader. Oh, well. Perhaps I have overstayed my welcome in the Bear camp. Or maybe money managers must indiscriminately put money to work fearing under-performance. As Mark Twain once said of the U.S. north country, "10 months of winter. 2 months of tough sledding" would perfectly describe working in this market.
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I'd like to say that I am enjoying watching California squirm with the highest taxes in the nation, the highest taxes on "the rich", and a budget disaster to prove, once and for all, that the silly economic sensibilities of the Left will always lead here - to disaster - but there can be no joy in watching governments ruin people. Way to go guys. California was not satisfied stealing from their most productive citizens - now they NEED to steal from working folks for the next several generations to pay for their ill-considered political beliefs. Still, you won't be hearing any "Mea Culpa from this crowd. They will find a way to blame GWB or Ronald Reagan or Abe Lincoln(LOL!), and their True Believer followers will fan out and spread the word.
California is the 8th largest economy in the world. A more perfect environment to test these silly tax and spend economic policies could not be found. These policies have failed miserably. But not to worry, the gang MS-13 will be happy to show you how its done.
Mentatt (at) yahoo
12 comments:
Is the fact that the old folks are finding 2% CDs and are being forced to buy dividend-paying stocks having anything to do with the stock market continuing to rise (the high-dividend bank stocks especially) that may pay 4-5% yield? Or are those numbers too small to make a difference? I know there are lots of retirees but perhaps not enough to matter. It's just the green shoots (and rainbows and ponies and butterflies) driving the S&P500.
According to my own little economic indicator the economy is improving. Traffic is noticeably thicker on I95 in the mornings and evenings. I've been driving the same stretch every day for 25 years. It varies with the economy. There was a big dip last fall and winter. Now its coming back. By what I've seen on the highway, the EIA gasoline numbers being steady over the last year is B^!! $#!t.
Maybe the newly printed money is doing its dirtywork. In order to get us out of this by the inflationary route, they have to induce wage inflation. That means a labor shortage and burnin' hot economy. It's only just begun...
Regards,
Coal Guy
The EIA gasoline numbers (at least demand for gasoline) haven't been flat over the last year ... in the last twelve months, the gasoline demand dipped and has since recovered .. if you believe government statistics. :)
http://tonto.eia.doe.gov/oog/info/twip/twip_gasoline.html (at the bottom)
I stand corrected.
Regards
you always say u will change your mind if the data says otherwise, but the data still shows a picture of deterioration or at best leveling out which does not mean things are getting better so why would that turn you or anyone else into a bull? Just because the market goes up? the market stopped being rational a while back.
As for silly sensibilities of the left, Germany has free healthcare and higher education, as does austria and neither of those countries have deficits. They both do very well on the mad scientists recent lists. There are many more examples of this. The government keeps the costs of both down, whilst in america they are ludicrously priced.
Free healthcare doesnt have to equal a chronic deficit. There are many reasons for americas debts, very little of which have to do with providing essential services for people.
Doesn't a bull market climb a wall of Owl Poop, or something?
In inflation one would expect stocks go up, commodities go up, and bonds go down. What is the quandary?
Eventually I think it will go parabolic; although I think now is a bit premature. Rising prices with falling wages will just lead to another crash. Methinks we still have at least one strong deflationary bought first, but I have been off before.
PS. If one doesn’t like their lot in CA they can always leave, even the middle class. My town has a bunch of California ex pats, they typically sell their 1K-2K SQFT home in CA then buy one here that is 5K-8K SQFT and costs half what they sold for. The only problem is they then get interested in government here and have learned nothing from the debacle they just left.
Our economy is matching our national dementia. Some days rational and coherent some days down right crazy.
But at least we don't have 100% 24/7 stupid crazy in charge now. It will take years to undo the damage of the last eight years of stupid crazy.
The Germany and the Austrians had a lot of experience in the 20th Century with greedheads and crazies running the show. That's why they can have Democratic Socialism that works quite adequately. Same for most of the rest of the western Euros.
They don't put looters in charge.
You have safety nets so you don't end up with a large population of serfs.
You have good wine and food and work hours and long vacations.
They just be smarter than us.
Healthcare analysis is like lovemaking and driving - everybody thinks they are above average and that is impossible.
The U.S. demographics are VERY different from Germany & Austria.
Coming from the lower working class I can tell you first hand what the problem with the US healthcare system is. In AMerica poor inner city people and the rural poor do EVERYTHING within there power to destroy their health. It ain't the kids coming out of grad school that populate the obese demographic and it ain't the professional class' kids for the most part within the bell curve distribution chart) that are addicted to drugs and violence (yes, I realize that that is not an absolute - spare me the 6 sigma event, please).
20% of the American population consumes 80% of its healthcare resources - the same is true in Germany. What is also true is that the 20% in America is a group whose neighborhood you wouldn't want to be found in even at 12 noon.
I have been all over Germany. Even your working class to poor neighborhoods are well maintained by the residents. That ain't true over here.
RE the markets...
I am a trader for a LIVING. I was just bitching that I
missed this trade. I do not stand on ceremony, the market is always right. My idea of a long term hold is next month.
And that ain't the half of it...
Interest rates have to rise because REAL money is in short supply, and it'll get much, much worse for a long time to come because China doesn't want other people playing with its savings. And oil prices HAVE to go up because, although the U.S. isn't using so much, the rest of the world (e.g. China and India) are ploughing on - it's just that they take much of their oil direct and aren't buying so much in the markets.
As for shares, I think two things are happening; one is the devaluation of all Western currencies, more or less together, so share and commodity prices trend upwards. But I also think China is offloading dollars into buying key international companies.
Meanwhile Greg, stick with your instincts; it's not a good time to follow the lemmings; I think they're heading over the cliff!
By the way, about California; I had the impression that the main problem was the referendum system. If you ask people,'Do you want lower taxes?' they're going to say YES! If you ask people,'Do you want more State benefits?' they're going to say YES!
Power To The People!!
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