Business / Economic / Financial
[ This link to a somewhat more cumulative blog posts page will precede current days news since most all topics remain current in terms of impact and longer-term effect and can be searched by topical index term more easily. The same is provided since the blog site http://alpeiablog.blogspot.com has just been censored as to size by google which is typical for google as nsa / cia / gov’t shill as more are becoming aware of. The same is true for microsoft, another co. that’s seen their best days and relies on the government to maintain their monopoly. Up to now the better page http://www.scribd.com/alpeia is provided for ease of formatting and clarity thereby while the Washington Post page is the real deal but without formatting http://www.washingtonpost.com/wp- srv/community/mypost/index.html?plckPersonaPage=PersonaComments&plckUserId=alpeia&newspaperUserId=alpeia (Only up to 3-11-11-you must be logged in - (Washington Post) [ Comments COMMENTS ARE CLOSED WHILE WE UPGRADE OUR SYSTEMS ] the comments are no longer archived on their site ) . The following is the cumulative archive of blog posts / topics for 2010 as the new year starts anew (and archived by quarter): http://albertpeia.com/December312010postsarchive.htm or PDF formatted version
http://albertpeia.com/December312010postsarchive.pdf ]
Pelosi, far from the helm (Washington Post) [ Oh come on! Mr. Milbank's once again starting to sound like a political school-child; and, embarrassing himself quite profusely as he does so. Indeed, making excuses for wobama is intellectually and journalistically dishonest. After all, wobama came in riding the wave of discontent with the easiest act in history to follow; viz., the undeniably failed presidency of war criminal / moron dumbya bush. Make no mistake, he ran on exactly that. Yet he's done the same (as bush), even as he similarly (as did bush) have the short-lived (for good reason) benefit of 'control' of both houses of congress. He had a mandate to do what he promised to do and didn't. Unbridled war spending continued in that new debacle called Afghanistan, no pros of the frauds on wall street, and on top of that, some excess spending of his own. Pelosi was, is a joke as they've all become, with 'wobama the b' (for b***s***) the biggest joke. He's really no more than a stereotype without any credibility whatsoever. He is pathetic; which, derivatively makes Mr. Milbank pathetic in making excuses for this morass of absolutely nothing, who stands for absolutely nothing, that nothing being 'wobama the b' (for b***s***) . No excuses … all wobama! Obama seeks spending cuts, taxes on wealthy (WP) [ Too little, too late for 'wobama the b' (for b*** s***) ! After all, though contraindicated, he previously extended the war criminal, moron bush tax cuts to what is now realistically perceived as 'their base' (that top 1 percent). Wobama has no credibility whatsoever, wars and all. He's just plain done! Liberals worry Obama has given up ground (WP) [ Worried? Given up ground? Are they kidding? Is this some parallel universe they're operating in? Come on! Wake up! Wobama's done! Finito! He's been and is an abject failure as president; both by what he's done as not promised and not done as promised, viz., perpetual wars and overspending, etc., and no prosecutions of the frauds on wall street, etc., respectively. He is a total failure and an embarrassment to the presidency as was his predecessor. He's totally incompetent with an innate predilection to 'zig when he should zag' … 'wobama the b' (for b*** s***) is pathetic! Quite simply, for wobama, it's too late! … Drudgereport: RASMUSSEN: President hits new low Taxpayers foot $850M bill for Wall St.’s pension fees NY Post | New York City taxpayers are helping to pay $850 million in Wall Street investment fees. ] Without a liberal rudder, Obama drifts to the center.
Parker: The GOP plays a crazy Trump card (Washington Post) [ I don't know what polls Ms. Parker's referring to; but unless she's referring to mobster trump apprentice news (trump was fired from his own casino company), that certainly doesn't comport with polls I've read. Moreover, like palin, trump's the joke that keeps on giving (for SNL, late-night talk hosts, etc.). Indeed, such a move by the GOP would almost guarantee a 3rd Party shoe-in. After all, trump has as little credibility as wobama. My other t_rump posts won't fit here, but the latest from Drudge is noteworthy (note the date, inside parentheses my words) (4-15-11) Drudgereport: Flashback: Updated 11/11/2008 09:19 PM NY1 Exclusive: Donald Trump Slams "Evil" Bush, Praises Obama By: Dominic Carter 'If there's one thing certain about real estate mogul Donald Trump, it's that he (like Charlie Sheen) likes to win (duh … winning) ... even though he endorsed John McCain for president. "McCain, really, that was almost an impossible situation," said Trump. Bush has been so bad, maybe the worst president in the history of this country. He has been so incompetent, so bad, so evil that I don't think any Republican could have won
During an exclusive interview with NY1 in his Midtown office on Fifth Avenue, Trump slammed President George Bush's foreign policies.
"You know, you can be enemies with people, whether it's Iran, Iraq, or anyplace else and you can still have dialogue. These people wouldn't even talk with him. It's terrible," said Trump.
While he had harsh words for the outgoing president, he had a much different opinion of President-elect Barack Obama.
"I think he has a chance to go down as a great president. Now, if he's not a great president, this country is in serious trouble," said Trump.
"I think [Obama's] going to lead through consensus," continued Trump. "It's not going to be just a bull run like Bush did. He just did whatever the hell he wanted. He'd go into a country, attack Iraq, which had nothing to do with the World Trade Center and just do it because he wanted to do it."
Trump was then asked if he ever thought he would see an African-American president in his lifetime.
"They always said 100 years before a black man or woman could be elected president. And the 100 years turned out to be, like, one year. He's done an amazing job," said Trump.
An Associated Press GFK poll released Tuesday shows that a majority of people share Trump's approval of Obama...' trump:
'CARTER WORST PRESIDENT IN HISTORY'...
'BUSH WORST PRESIDENT IN HISTORY'...
'OBAMA WORST PRESIDENT IN HISTORY...
[ Clearly, like wobama, mobster trump is full of his own s***! ] ]
Rob Pegoraro logs off from The Post (Washington Post)After 11 and a half years, I’m leaving The Post. Here are six lessons I learned from my experience. [ Truth be told, I'm not a big fan of that 'latest new thing' technology orientation. Indeed, I was very wary of and opposed digitization of books only because of the ease by which ultimately these sources of knowledge could then be abridged, altered, to the point that the point therein was no point at all, which seems to be the direction of things, certainly within the last decade plus, frauds and all. I no longer care about that, because truly, that no longer matters (not enough time for significant evolutionary effect). I especially appreciate your 2nd lesson which I repeat here for my record. It is interesting that you chose the apple power mac cube as but a impractical illusion:
'… Anything can look great in a demo. For many years, my signature bore the saying — a tweak on a quote from sci-fi author Arthur C. Clarke seen online — that “Any sufficiently advanced technology is indistinguishable from a rigged demo.” While it’s not possible to make every botched product look good in a demonstration, a huge number of flops have looked fantastic and compelling in a precisely rehearsed demo. (I admit it: The Power Mac Cube looked magical and revolutionary at first.) And enough people will buy after that introduction to make the gadget look like a hit. As tech analyst Michael Gartenberg observes, “You can sell 50,000 of anything.” …'
I have sampled the apple products and have invariably concluded that they are overpriced, overvalued, and are but means of getting consumers to part with their cash (ie., exclusive, proprietary itunes prerequisites, etc.) owing to what I infer to be particularly influenced by Jobs' LSD induced empathetic feel for the 'pizzaz' that has invariably worked most applephiles into a frenzy with each 'new introduction' (the touch screen / ipad was an exception which though easily produced for far less gets an 'a' for pioneering). I further believe that apple's success is a testament to how dumb americans particularly have become. This is no shill for the pc which both as I write here and for other mundane tasks I've been constrained to use linux ubuntu (dual boot) for stability otherwise absent with xp (microsoft is a dinosaur). Given the state of the world, it is not so surprising that such obsessions with devices as those alluded to, the next new thing, etc., have a psychological component that does not bespeak mental well being / balance. This is not to say that I deplore technology in which to the contrary I have found great utility. What it is, since you mentioned Arthur C. Clarke, is what I perceive to be a new innate longing for HAL (and not IBM particularly), in one form or another. Ah! The wisdom of cats! Good Luck!
House passes GOP’s 2012 budget blueprint (Washington Post) [ Why am I skeptical? Well, this is early in that 'horse-trading' that they try to foist off as the 'american politcal process' that has failed so well in the past. But one thing can be said for sure, if, like wobama et als, the plan does not include prosecution of the (too big to fail) big frauds on wall street with jail, fines, disgorgement before even a penny is asked from the citizenry, then you're looking at a guaranteed 3rd party victory in 2012. Budget passes, but conservatives let down (Washington Post) The compromise touted as cutting $38.5 billion would actually only cut $352 million this fiscal year, an analysis says. While that didn’t prevent the budget from passing, it could sour some Republicans. [ Come on! This 'budget deal' was a showboating scam ab initio … Davis gets this right: Davis ‘… This is how we pay off our current debts and I think bondholders are simply happy to get anything out of a country that admits it owes $15Tn (1/4 of global GDP) but probably owes closer to $60Tn (entire global GDP) in the form of unfunded liabilities. The funniest thing about this (and you have to laugh) is to see Conservative pundits get on TV and talk about how we need to cut $100Bn worth of discretionary spending to "fix" this (while continuing to spend $1Tn on the military and $1Tn on tax cuts for the top 1% each year). There is no fixing this and even a Republican said you can’t fool all of the people all of the time. THIS HOUSE OF CARDS IS TEETERING FOLKS – PLEASE BE CAREFUL OUT THERE! ‘ . Obama seeks spending cuts, taxes on wealthy (WP) [ Too little, too late for 'wobama the b' (for b*** s***) ! After all, though contraindicated, he previously extended the war criminal, moron bush tax cuts to what is now realistically perceived as 'their base' (that top 1 percent). Wobama has no credibility whatsoever, wars and all. He's just plain done! Liberals worry Obama has given up ground (WP) [ Worried? Given up ground? Are they kidding? Is this some parallel universe they're operating in? Come on! Wake up! Wobama's done! Finito! He's been and is an abject failure as president; both by what he's done as not promised and not done as promised, viz., perpetual wars and overspending, etc., and no prosecutions of the frauds on wall street, etc., respectively. He is a total failure and an embarrassment to the presidency as was his predecessor. He's totally incompetent with an innate predilection to 'zig when he should zag' … 'wobama the b' (for b*** s***) is pathetic! Quite simply, for wobama, it's too late! … Drudgereport: RASMUSSEN: President hits new low Taxpayers foot $850M bill for Wall St.’s pension fees NY Post | New York City taxpayers are helping to pay $850 million in Wall Street investment fees. ]
Grants for housing counseling slashed / Job training feels budget ax (Washington Post) [ For what jobs? The 'new green jobs'? How is such an investent going to pass muster in rigorous financial analysis for profit? Where's the capital coming from? People must come to grips with the reality that the nation's defacto bankrupt and all that that entails.The news is bad, the reality daunting, yet stocks rallied … A mystery? … Yes, until you look up and see that blazing full moon. I was somewhat nonplussed by the suckers’ market bounce; and then, ‘Eureka!’ … there it was, staring down for all to see … a blazing full moon. Yes, they have such effects on lunatics as in pervasively corrupt, defacto bankrupt america et als; but particularly on wall street, and it certainly doesn’t take much to push the frauds on wall street over the edge and into their predisposed fraudulent madness. In fact, you could say, ‘it’s in their genes’ America Is a Failed State Because It Won’t Prosecute Financial Crime Washington’s Blog | It’s now mainstream news that none of the big financial criminals have been prosecuted. This is the grim economic reality [ http://albertpeia.com/grimreality.htm ]. Selling In May Is Very Good Advice This Year Harding / April Is a Good Time to Sell Adler ( I quite agree … overvalued to the hilt in this new manipulated bubble … at the least a 'sell in May and go away', but 'don't be mentally ill, sell in April!' ) Equity Valuations Are Forming the Second Biggest Bubble in U.S. History Kaspar 'Despite the terrible economic performance of the past ten years, equity valuations are the 2nd largest bubble in U.S. history... the cause and the potential ramifications of this are astounding. . According to Yale University’s Dr. Robert Shiller, the market is now 41% overvalued according to this valuation metric. The only time the markets have been more overvalued was a few brief months in 1929 and the tech bubble. [chart http://static.seekingalpha.com/uploads/2011/4/12/saupload_cape_thumb1.png ]
Exhibit 2: The Q ratio, which measures total market value compared to its replacement cost.
The Q-ratio data in the chart below dates back to 1900. According to the data, the markets have now surpassed the 1929 peak valuation by over 8%.
[chart http://static.seekingalpha.com/uploads/2011/4/12/saupload_q_ratio_thumb1.png ]
… bubbles turn a believable story/trend into an overvaluation. In the 1700s during the South Sea Bubble...Railroading prospects induced a bubble in the late 1800s ... In the 1920s, a bubble … A similar life-changing invention – the Internet – swept the attention of investors in the 1990s ...
What is the story today? The prospect of inflation? High unemployment?
Exhibit 3: The gap between projected 12-month earnings against the 10-year average
... the market is stretching this reversion greater than 2000 and 2007!
[chart http://static.seekingalpha.com/uploads/2011/4/12/saupload_gap_between_12_month_average_thumb1.png ]
... growth in earnings have been artificially manufactured...
· The change in accounting rules for the financial sector by FASB has generated massive “false” account profits beginning in 2009.
· The extended (and then further extended) unemployment benefits have kept an artificially higher demand for consumer consumption. As a result, the US government has artificially subsidized corporate profits.
· The billions saved through “free loading” by homeowners who have defaulted on their mortgages yet maintained their residence, thus living without a mortgage payment.
· The artificially suppressed interest rates.
So, not only do we have a valuation bubble, but the earnings on which the projections are based are non-sustaining... same overvaluation situation as a few years ago … nothing fixed ...'
____________________________________________
The news is bad, the reality daunting, yet stocks rallied … A mystery? … Yes, until you look up and see that blazing full moon. I was somewhat nonplussed by the suckers’ market bounce; and then, ‘Eureka!’ … there it was, staring down for all to see … a blazing full moon. Yes, they have such affects on lunatics as in pervasively corrupt, defacto bankrupt america et als; but particularly on wall street, and it certainly doesn’t take much to push the frauds on wall street over the edge and into their predisposed fraudulent madness. In fact, you could say, ‘it’s in their genes’ America Is a Failed State Because It Won’t Prosecute Financial Crime Washington’s Blog | It’s now mainstream news that none of the big financial criminals have been prosecuted. This is the grim economic reality [ http://albertpeia.com/grimreality.htm ]. This manipulated bubble in this secular bear market based on b*** s*** alone and today’s short-covering / suckers’ rally provides an especially great opportunity to sell / take profits while you still can since there's much worse to come! Selling In May Is Very Good Advice This Year Harding / April Is a Good Time to Sell Adler ( I quite agree … overvalued to the hilt in this new manipulated bubble … at the least a 'sell in May and go away', but 'don't be mentally ill, sell in April!' ) Equity Valuations Are Forming the Second Biggest Bubble in U.S. History Kaspar 'Despite the terrible economic performance of the past ten years, equity valuations are the 2nd largest bubble in U.S. history... the cause and the potential ramifications of this are astounding. Exhibit one: The cyclically-adjusted price-to-earnings ratio, or CAPE. This is not a “fad” valuation metric. CAPE dates back to 1871, offering 140 years worth of data, during which time, the mean price-to-earnings ratio is 16. According to Yale University’s Dr. Robert Shiller, the market is now 41% overvalued according to this valuation metric. The only time the markets have been more overvalued was a few brief months in 1929 and the tech bubble. [chart http://static.seekingalpha.com/uploads/2011/4/12/saupload_cape_thumb1.png ]
Exhibit 2: The Q ratio, which measures total market value compared to its replacement cost.
The Q-ratio data in the chart below dates back to 1900. According to the data, the markets have now surpassed the 1929 peak valuation by over 8%.
[chart http://static.seekingalpha.com/uploads/2011/4/12/saupload_q_ratio_thumb1.png ]
… bubbles turn a believable story/trend into an overvaluation. In the 1700s during the South Sea Bubble...Railroading prospects induced a bubble in the late 1800s ... In the 1920s, a bubble … A similar life-changing invention – the Internet – swept the attention of investors in the 1990s ...
What is the story today? The prospect of inflation? High unemployment?
Exhibit 3: The gap between projected 12-month earnings against the 10-year average
... the market is stretching this reversion greater than 2000 and 2007!
[chart http://static.seekingalpha.com/uploads/2011/4/12/saupload_gap_between_12_month_average_thumb1.png ]
... growth in earnings have been artificially manufactured...
· The change in accounting rules for the financial sector by FASB has generated massive “false” account profits beginning in 2009.
· The extended (and then further extended) unemployment benefits have kept an artificially higher demand for consumer consumption. As a result, the US government has artificially subsidized corporate profits.
· The billions saved through “free loading” by homeowners who have defaulted on their mortgages yet maintained their residence, thus living without a mortgage payment.
· The artificially suppressed interest rates.
So, not only do we have a valuation bubble, but the earnings on which the projections are based are non-sustaining... same overvaluation situation as a few years ago … nothing fixed ...'
10 Scary Charts: A 'Post-Recession' Economy Wake Up Call Kavadas 'I find the following 10 charts to be disturbing. These charts would be disturbing at any point in the economic cycle; that they depict such a tenuous situation now – 21 months after the official (as per the 9-20-10 NBER announcement) June 2009 end of the recession – is especially notable.
These charts raise a lot of questions. As well, they highlight the "atypical" nature of our economic situation from a long-term historical perspective. I regularly discuss many troubling characteristics of our economy in this EconomicGreenfield.com blog.
All of these charts (except one, as noted) are from the Federal Reserve, and represent the most recently updated data.
These following charts are from the St. Louis Federal Reserve:
Housing starts (last updated 3-16-11):
(Click to enlarge)
The Federal Deficit (last updated 2-17-11):
(Click to enlarge)
Federal Net Outlays (last updated 2-17-11):
(Click to enlarge)
State & Local Personal Income Tax Receipts (% Change from Year Ago)(last updated 3-25-11):
(Click to enlarge)
Total Loans and Leases of Commercial Banks (% Change from Year Ago)(last updated 4-11-11):
(Click to enlarge)
Bank Credit – All Commercial Banks (% Change from Year Ago)(last updated 4-11-11):
(Click to enlarge)
M1 Money Multiplier (last updated 4-7-11):
(Click to enlarge)
Median Duration of Unemployment (last updated 4-1-11):
(Click to enlarge)
This next chart is from the CalculatedRisk.com blog post of 4-1-11, and it shows (in red) the relative length and depth of this downturn and subsequent recovery from an employment perspective:
(Click to enlarge)
This last chart is of the Chicago Fed National Activity Index and it depicts broad-based economic activity (last updated 3-21-11):
http://static.seekingalpha.com/uploads/2011/4/14/saupload_cfnai_monthly_ma3_3_21_11.png
(Click to enlarge)
I will update these charts on an intermittent basis as they deserve close monitoring ...'
Consumers spend more, but on gas (Washington Post) [ Retail Sales Miss Expectations Wall St. Cheat Sheet On Wednesday April 13, 2011, 9:40 am EDT 'The U.S. Census Bureau announced today that advance estimates of U.S. retail and food services sales for March, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $389.3 billion, an increase of 0.4 percent from the previous month, and 7.1 percent above March 2010. Analysts were expecting a rise of 0.5 percent...' Retail sales? Where? The mall? If they can find one with stores … Drudgereport: Malls hit highest vacancy in 11 years... This is the grim economic reality http://albertpeia.com/grimreality.htm . A Trading System That Challenges the Efficient Market Hypothesis [ ...What parallel universe is McCurdy operating in? Even in the heyday of that so-called hypothesis, close examination of the data indicated that if you weren't timing the market you were, in a somewhat 'Charlie Sheenish' manner of speaking, duh! … losing! (my MBA Thesis, 1977, NYU GBA, Finance – which required study / mastery of such math intensive theory). Said 'hypothesis' wasn't true then and certainly isn't true today where complex computer-programming can and does artificially produce the various criteria / buy / sell / signals alluded to in the article (they're widely known / followed) creating the rigged / fraudulent trading game geared to maximized the 'churn-and-earn' commission profits (net negative in economic terms) and enabling the passing of 'those hot potatoes'/paper shares in a manner that resembles a game of musical chairs with those not in the loop winding up holding the bag (including pension funds, etc.); all the while funding those lavish lifesyles / over-compensation of the frauds on wall street along with the direct / indirect bribes inuring them from stigma and as well, insulating them from proper scrutiny and prosecution. Fundamentals, fundamental rational analysis has become virtually irrelevant to these now fraud-prone markets like never before in history facilitating frauds of magnitudes that have made the rationalization 'too big to fail' a byword... The frauds on wall street et als should be criminally prosecuted, jailed, fined, and disgorgement imposed. Dave's Daily 'If you can keep interest rates this low this long, its inevitable cheap financing can allow companies to start cobbling each other up. Further Ben's policies allow companies like IBM to sell bonds at 1% and buy back shares with the proceeds (total paper bubble-scam). POMO is occurring almost daily and Primary Dealers can buy back their shares and pay dividends with what essentially is taxpayer money-- … an especially great opportunity to sell / take profits while you still can since there's much worse to come! ]
Don't Be A Lemming, Keep Cash In Your Portfolio Dohmen 'My work shows that the rally going into early April brought bullish sentiment in the stock market to levels seen at extreme tops in 2000 and 2007. That doesn’t necessarily mean that we will have a crash, because the Fed would fight any strong market decline with everything they have. But it does say that a great amount of cash in your portfolio right now would be a good idea.
The low volume on the bounce since the mid-March low has been pathetic. Until the last two years, that was always a very important warning signal. Yet, most money managers don’t even analyze charts. The late March rally, which created so much enthusiasm, didn’t even bring the major indices such as the S&P 500 and the NASDAQ Composite above their February highs.
Mutual fund cash is now lower than at the top in 2007. Low fund cash positions correlate very well with market tops. Our astute colleague Alan Newman (www.cross-currents.net) points out that even with the rise in fund assets in January, the total outflow since February 2007 has been $213 billion. It appears that the average investor is gone, although in January there was an inflow of over $25 billion. Are they getting back in at just the wrong time?
Corporate insiders are selling at the heaviest pace since other major market tops. Obviously, they don’t agree with Wall Street about the euphoric outlook. Have you noticed that so many top company officials being interviewed make cautious remarks about “things are improving,” or “we see some positive signs, etc.” When there is genuine improvement, these people will shout it from the rooftops on national TV.
But in spite of this, investment professionals are super-bullish. Rydex is closing down 12 of its leveraged, inverse ETF’s, the ones that sell short, because of the low amount of assets. Could that mean that traders are not interested in being short? That’s often a very good contrarian signal.
Investors Intelligence, which surveys the sentiment of investment advisors, in their latest survey had the percent of bulls increase to 57.3% from 51%. That’s a huge jump and now is at levels seen at important market tops. The bears have plunged to 15.7% compared to 23.1%. The difference between bulls and bears is now at 41.6, which is in the “danger” zone (over 40).
Because so far the stock market has almost ignored some of the greatest global turmoil in many decades, including one of the worst natural disasters in Japan, money managers believe that the market cannot go down. So, they buy, which triggers buying by other managers, which then creates more buying. That continues, until they look and suddenly see that they are looking at themselves in the mirror and that there is no one to sell to.
The Fed’s QE2 is ending in June. That’s no secret. There is a big 86% correlation between the size of the Fed’s balance sheet–read security purchases–and the S&P 500. Therefore, if the balance sheet stops growing in June, so should the stock market rise. The bulls say that’s already in the market. That’s totally unrealistic. When suddenly $50 billion per month of liquidity injection is missing, there are consequences.
The large trading operations have to attract sufficient buyers from the sidelines to enable the “distribution” of their stock holdings. This is done by having produced that last gasp rally when the reluctant bulls can no longer stand being out of the market. At a top, these lemmings finally plunge in, allowing the smart money to make the turn.
Don’t be a lemming!'
U.S. bank failure tally hits 34 Regulators close six banks to bring the year’s tally of bank failures to 34, according to the Federl ...
Earnings stumbles to awaken bears (Reuters)
Sustaining Disbelief in the Face of Obvious Impossibilities / The Problem With Inflation Targets '... there are plenty of other elements of core inflation that are rising, and the uptrend is well-established...'
Stocks are Cheap, Buy Now! - Really? Maierhofer, April 15, 2011
'This is no time to sell stocks.'
'Evidence is building that we have a self-sustaining recovery.'
'We see accelerating growth around the globe.'
'This market looks cheap to us.'
'Dividends may increase to a record $31.07 a share in 2013.'
All the above quotes were taken from a recent Bloomberg article regarding the most explosive profit growth in the past century. This profit explosion is happening right here, right now.
'The gap between projected 12-month profits and average earnings over the last 10 years is set to widen the most since 1951,' continues the article. Projected earnings are expected to clock in at a record $91 for S&P 500 companies.
The Best 'Buying' Opportunity since 1951?
Before you trigger the 'buy everything now' button, think about the above statement for a second. If the gap between projected profits and average earnings is the biggest since 1951, it means that it's bigger than in 2000 and 2007. Could that be a contrarian indicator?
I purposely picked the years 2000 and 2007 because they marked major market tops and were followed by sizeable declines. The gap between projected and average profits today is, in fact, larger than it was in 2000 and 2007, although not by much.
If you graph this out, you would see three spikes; one pop in 2000, one in 2007 and one now. Every time the spread spiked to new highs, stocks fell hard.
In 2000, it was the post-tech boom (NYSEArca: XLK - News) crash. In 2007, it was the overleveraged financial sector (NYSEArca: XLF - News) that caused a nasty recession. Both times, the spread was the highest since 1951.
Keep in mind that the spread is based on projected earnings. Projected earnings are about as certain as a politician's promise.
Accuracy of Earnings Projections
Nevertheless, let's examine the accuracy of analysts and earnings projections.
'As earnings estimates are ratcheted down and hope for a quick economic fix fades, the once-inconceivable notion of returning to Dow 5000 or S&P 5000 looks a little less far-fetched.'
This quote was taken from a Wall Street Journal front-page article featured on March 9, 2009. If history isn't your forte, March 9 was the date the Dow Jones (DJI: ^DJI) bottomed at 6,470, the S&P (SNP: ^GSPC) at 666, and the Nasdaq (Nasdaq: ^IXIC) at 1,265.
Days before the March 2009 low, Goldman lowered its earnings outlook for the S&P from $113 incrementally to $40. Bank of America Merrill Lynch lowered their estimate to $46 and Citigroup lowered to $51.
At the same time - on March 2, 2009 - the ETF Profit Strategy Newsletter sent out a special buy alert and recommended loading up on broad market indexes, economically sensitive sectors, dividend ETFs like the iShares Dow Jones Dividend ETF (NYSEArca: DVY - News), SPDR S&P Dividend (NYSEArca: SDY - News) and leveraged ETFs like the Ultra S&P ProShares (NYSEArca: SSO - News), and Ultra Financial ProShares (NYSEArca: UYG - News).
The moral of the story is that analysts tend to be overly bullish at market tops just as they are overly bearish at market bottoms. Based on Standard & Poor's data, earnings actually peaked at $87 in 2006 and never reached Goldman's projected upside target of $113. Earnings also bottomed before they reached Goldman's projected down side target of $40.
Of course, even analysts have an accuracy sweet spot. This sweet spot is during extended trends. Analysts are correct as long as the trend persists, but as a group they never see a trend change coming.
Ready for a Curveball?
It seems like analysts have selective memories. Here is what Merrill Lynch's 2007 Global Market Forecast predicted: 'First, the global economy will continue to grow in 2007 - with no sign of a cyclical slowdown.'
Keep in mind that in 2007, there was no European debt crisis, unemployment in the U.S. was around 5% not 9%, housing prices were stable, there was no financial crisis, there was no Middle East unrest, there was no BP oil spill, there was no Japanese earthquake, Tsunami, and nuclear disaster, etc.
Rather than counting un-hatched chickens (projected earnings), let's take a look at P/E ratios with substance. The chart below shows a 110-year history of the Robert J. Shiller's cyclically-adjusted P/E ratio.
Chart http://www.etfguide.com//contributor/UserFiles/8/Image/CAPE%20PE%204%2011.gif
The red line marks the average since 1900. Professor Shiller considers the S&P to be 41% over valued.
Valuations are always mean reverting. As such, owning stocks at current prices is risky even though - or rather because - analysts expect earnings to rise.
Safety Locks
Whenever rich valuations rendezvous with optimism and complacency, investors should become extra cautious. The ETF Profit Strategy Newsletter identified three such occasions over the past 15 months - January 2010, April 2010, and February 2011.
Each time, stocks (NYSEArca: VTI - News) declined between 7 - 20%. However, all three declines turned out to be head fakes and optimistic analysts' projections haven't been as reliable as contrarian indicators as they were in March 2009 and late 2007. I suppose this is due to the Federal Reserve's QE2 liquidity.
Just as QE2 is a plus for equities (and commodities) right now, it is likely to eventually turn into a double or triple minus as individual and institutional investors start unloading some of their positions. Eventually, the 'too good to be true' syndrome will multiply like a malignant cell and overwhelm the exchanges with sell orders.
This doesn't mean stocks can't go higher in the short-term. In fact, it would be great to see the S&P rally to its ideal target range. The ideal target range is comprised of a multi-decade trend line and important Fibonacci resistance. If the S&P is able to rally into that range, it would have exhausted its up side potential and has no obvious reason to come back anytime soon...'
Why Options Traders See a 10% Market Correction Rama 'The Teflon market began chipping on April 7 after another earthquake hit Japan, threatening to bring a second tsunami.
The tsunami alert was a false alarm, but the S&P held a 4-day losing streak till Wednesday. Try as investors may, however, they haven't been able stay away from stocks. With all that easy money flying around and few other options for high returns, equities have held their year-to-date gains despite mounting geopolitical troubles that threaten to derail the recovery.
But a big trade Thursday in the SPDR S&P 500 ETF [SPY Loading... () 
] shows stock investors' nerves of steel are faltering. The trade, called a put fly, positioned for a gain if the S&P 500 breaks through the key 1304 technical level and plunges 10% from there to 1180 (a 118 level on the SPY).
"To me it seems interesting that people are concerned with downside more than they were," said Jim Iuorio, Director at TJM Institutional Services. "There are a lot of dark clouds gathering, oil, labor numbers, there are more nerves," he added.
The put fly turned out to to be a bad trade for Thursday because the S&P broke through the 1304 level and rejected it, ending higher. That was a moderately positive signal for the index, Iuorio noted, but the trade belies the persistently low volatility index, which is holding below 17 despite investors' growing skittishness.
Iuorio expects volatility to shoot higher once Fed liquidity dries up, so he says it's prudent to buy it now that it's cheap.
"If you keep preventing a correction through government liquidity, when that correction finally comes it, it could be more dramatic than normal," the Options Action contributor said. '
Gold Celebrates Complete Lack Of Inflation By Surging To New Record Zero Hedge | Gold takes a new all time high of $1,481.46.
Rand Paul: ‘Pentagon thinks it’s too big to audit’; no serious budget cuts proposed in Washington Infowars | Senator Rand Paul said the Washington shutdown was threatened over nothing, because no serious cuts were proposed.“We threatened to shut down Washington over nothing, because we’re not cutting spending in any serious way…” that was just one part of Senator Rand Paul’s fiery floor speech blasting both sides of the isle for failing to make a sober effort to operate from a balanced budget.
America Is a Failed State Because It Won’t Prosecute Financial Crime It is now mainstream news that none of the big financial criminals have been prosecuted.
Oil Hits 32-Month High As Unrest Persists in the Middle East Marin Katusa | For at least the rest of the year, uncertainty is the most reliable aspect of oil.
35 Statistics That Show The Average American Family Has Been Broke Down, Tore Down, Beat Down, Busted And Disgusted By This Economy The economic statistics that you are about to read are incredibly shocking, but they are also very, very real. Tonight there are going to be millions of men and women all across America that cannot sleep because they are consumed with anxiety about their financial problems.
(4-15-11) Dow 12,341 +56 Nasdaq 2,765 +4 S&P 500 1,319 +5 [CLOSE- OIL $110.06 (-54% for year 2008) (RECORD TRADING HIGH $147.27) GAS $3.82 (reg. gas in LAND OF FRUITS AND NUTS $4.20 REG./ $4.30 MID-GRADE/$4.40 PREM./ $4.54 DIESEL ) / GOLD $1,486 (+24% for year 2009) / SILVER $42.96 (+47% for year 2009) PLATINUM $1,783 (+56% for year 2009) Metal News for the Day / DOLLAR= .69 EURO, 83 YEN, .60 POUND STERLING, ETC. (How low can you go - LOWER)/ Interest Rates: http://www.treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=yield 10 YR NOTE YIELD 3.43% …..… AP Business Highlights ...Yahoo Market Update... T. Rowe Price Weekly Recap – Stocks / Bonds / Currencies - Domestic / International This Is a Secular Bear Market and The End of Buy and Hold … and Hope The bull market that never was/were beyond wall street b.s. when measured in gold ‘WORST ECONOMIC COLLAPSE EVER’ Must Read Economic / Financial Data This Depression is just beginning The coming depression… thecomingdepression.net The Next Wave of Collapse is Coming Sooner than you think Sliding Back Into the Great Depression ABSOLUTELY, ABSURDLY, RIDICULOUS! SELL / TAKE PROFITS WHILE YOU CAN SINCE MUCH, MUCH WORSE TO COME!
National / World
Complaining About TSA Molestation Will Get You Profiled as a Terrorist Kurt Nimmo | Objecting to TSA goons molesting your six year old daughter is characterized as “contempt against airport passenger procedures.”
“Outraged and Disgusted” Congressman Introduces Legislation To Bar TSA From Groping Children Steve Watson | “I am so furious with them I can’t even see straight,” Chaffetz said.
It’s Official: “Arab Spring” Subversion U.S. Funded Tony Cartalucci | We must see the global corporate-financier empire as the source of the problem and its removal and replacement as the solution.
Obama Budget Plan: Higher Taxes on Small Businesses American Small Business League | Fortune 500 firms and other corporate giants are the actual recipients of most federal small business contracts.
Banksters Cook Up Economic Snake Oil for Egypt Kurt Nimmo | A cabal of banking interests led by the World Bank prepares “action plan” for the impoverished country.
Why an Income Tax is Not Necessary to Fund the U.S. Government Devvy Kidd | Where do your “income” tax dollars go?
Our Income taxes go to the private group called the Federal Reserve Steve Balich | Do you want to know where your tax dollars really go?
20 Signs That A Horrific Global Food Crisis Is Coming The Economic Collapse | The world is on the verge of a horrific global food crisis.
Obama says ‘birther’ talk will be a liability for GOP (The Ticket) [ Listen to 'wobama the b' (for b*** s***) … having b*** s***ed everybody else, he’s now resorted to b*** s***ing himself … the story of his life! ]
CIA will not halt operations in Pakistan: official AFP | CIA has no plans to suspend “operations” in Pakistan despite objections from Islamabad leaders.
Russia: NATO gone too far in Libya Russian Foreign Minister Sergei Lavrov says NATO’s military intervention in oil-rich Libya has gone far beyond the mandate authorized by the United Nations.
Libya: The Hard-Sell is Coming When presidents are writing editorials in newspapers a hard-sell is just around the corner. Judging by the recent tripartite op-ed in the New York Times by Obama, Sarkozy, and Cameron regarding Libya, the hard-sell is most likely a protracted air campaign above Libya with an ever increasing ground presence below possibly leading to an all out invasion. Clearly the operation in Libya will exceed the “days or weeks, but not months” we were told it would take.
Now it IS regime change: Cameron, Obama and Sarkozy promise to keep bombing Libya until Gaddafi is gone David Cameron, Barack Obama and Nicolas Sarkozy upped the stakes in the Libya conflict last night as they vowed to fight on until Colonel Gaddafi is ousted.
Radiation Monitor in Richland Not Working Properly Air, water, and milk, the feds are watching closely for any spikes in radiation following the nuclear fallout in Japan. KEPR uncovered a flaw in the system. The air monitoring station in Richland isn’t working properly.
Japan Forces Top Official To Retract Prime Minister’s Comments That Fukushima Permanently Uninhabitable Chief Cabinet Secretary Yukio Edano has apologized to the public over media reports about the long-term inhabitability of areas around the Fukushima Daiichi nuclear plant.
Groundwater radiation level at nuke plant rises: TEPCO The concentration levels of radioactive iodine and cesium in groundwater near the troubled Nos. 1 and 2 reactors at the Fukushima Daiichi nuclear power plant have increased up to several dozen times in one week, suggesting that toxic water has seeped from nearby reactor turbine buildings or elsewhere, Tokyo Electric Power Co. said Thursday.
Somali pirates keep Indian hostages after ransomSomali pirates keep Indian hostages after ransom ... Navy reasons to summarily shell and sink, without taking prisoners, more pirate boats. ... http://freerepublic.com/focus/f-news/2705523/posts Somali pirates keep Indian hostages after ransom - Yahoo! News Apr 15, 2011 ... Somali pirates keep Indian hostages after ransom .... and night vison equipment to free the captured and kill the pirates, no prisoners! http://news.yahoo.com/s/ap/20110415/ap_on_re_af/piracy [ I really must say that I am amazed that these somali pirates are not bombed out of the water, and then bombed in their safe-haven homelands … Indeed, those 18 dead rangers over a decade ago on a humanitarian mission in Somalia who were paraded around by the skinnies garnered a similar response from me … a bombing from which no somalians would have walked away … you know, 'parking lot style'. Unlike the war crimes / war profiteering / self-destructive / self-defeating / nation-bankrupting wars in the mid-east, this would be action that needs doin’! I'm at a total loss for words. ]
Drudgereport: OBAMA BACK TO GALLUP LOW...
'YOU THINK WE'RE STUPID?'
Disappointed With Lack of 'Cool' Phone in Oval Office...
HOT MIC: GOP tried to 'sneak' agenda into budget...
CARNEY: 'Miscommunication'...
HOUSE PASSES $6 TRILLION SPENDING CUT PLAN...
U.S. gas prices pass $4 in some states...'...The national average has increased for 24 straight days, hitting $3.82 per gallon on Friday. Motorists in Connecticut, Illinois, California, Hawaii and Alaska now pay more than $4 per gallon. A gallon of regular cost an average of $3.979 in New York and $3.999 in Washington...'
PUSH CONSUMER PRICES HIGHER...
Feds Shut 6 Banks...
It's 2016: Dow's at 4000, gas prices sky-high: 'ATLAS SHRUGGED' hits the screen...
Will Conservatives Make Film A Hit?
STUDY: Nearly half of US meat tainted with drug-resistant bacteria...
Flashback: Updated 11/11/2008 09:19 PM NY1 Exclusive: Donald Trump Slams "Evil" Bush, Praises Obama By: Dominic Carter 'If there's one thing certain about real estate mogul Donald Trump, it's that he (like Charlie Sheen) likes to win (duh … winning) ... even though he endorsed John McCain for president. "McCain, really, that was almost an impossible situation," said Trump. Bush has been so bad, maybe the worst president in the history of this country. He has been so incompetent, so bad, so evil that I don't think any Republican could have won.
During an exclusive interview with NY1 in his Midtown office on Fifth Avenue, Trump slammed President George Bush's foreign policies.
"You know, you can be enemies with people, whether it's Iran, Iraq, or anyplace else and you can still have dialogue. These people wouldn't even talk with him. It's terrible," said Trump.
While he had harsh words for the outgoing president, he had a much different opinion of President-elect Barack Obama.
"I think he has a chance to go down as a great president. Now, if he's not a great president, this country is in serious trouble," said Trump.
"I think [Obama's] going to lead through consensus," continued Trump. "It's not going to be just a bull run like Bush did. He just did whatever the hell he wanted. He'd go into a country, attack Iraq, which had nothing to do with the World Trade Center and just do it because he wanted to do it."
Trump was then asked if he ever thought he would see an African-American president in his lifetime.
"They always said 100 years before a black man or woman could be elected president. And the 100 years turned out to be, like, one year. He's done an amazing job," said Trump.
An Associated Press GFK poll released Tuesday shows that a majority of people share Trump's approval of Obama...' trump:
'CARTER WORST PRESIDENT IN HISTORY'...
'BUSH WORST PRESIDENT IN HISTORY'...
'OBAMA WORST PRESIDENT IN HISTORY...
[ Clearly, like wobama, mobster trump is full of his own s***! ]
'Black Swan Dance Double: Filmmakers Are "Completely Lying" - In a new 20/20 interview airing tonight (4/15/11), Natalie Portman's dance double from Black Swan...
Eye on entertainment (Washington Post) [ I don't ordinarily 'do entertainment' but I'm compelled to comment that I was taken in on the following (I was somewhat amazed by what I falsely presumed to be Portman's 'quick study' ballet performance … not! … eh ... what can you expect from someone born in israel), but not taken in as so many in the latter concerning that highly publicized 'threat to society'; the infamous Lindsey Lohan. ‘Black Swan' double claims Portman did only 5% of dance shots...'The ballerina who served as a dancing double for Natalie Portman’s Oscar-winnning role in Black Swan tells EW she has been the victim of a “cover-up” to mislead the public about how much dancing Portman actually did in the film. “Of the full body shots, I would say 5 percent are Natalie,” says Sarah Lane, 27, an American Ballet Theatre soloist who performed many of the film’s complicated dance sequences, allowing Portman’s face to be digitally grafted onto her body. “All the other shots are me.”
Lane’s claim follows a March 23 L.A. Times article in which Portman’s fiancé and Black Swan choreographer Benjamin Millepied said Lane’s work in the film was far less significant. “There are articles now talking about her dance double [American Ballet Theatre dancer Sarah Lane] that are making it sound like [Lane] did a lot of the work, but really, she just did the footwork, and the fouettés, and one diagonal [phrase] in the studio,” he said. “Honestly, 85 percent of that movie is Natalie.”
Lane disagrees. “The shots that are just her face with arms, those shots are definitely Natalie,” she says. “But that doesn’t show the actual dancing.” Lane admits that she was never promised a particular title for her six weeks of work on the film, though she was disappointed to see that she is credited only as as “Hand Model,” “Stunt Double,” and “Lady in the Lane” (a brief walk-on role).
Lane also says that Black Swan producer Ari Handel specifically told her not to talk about her work to the press, even though she claims there was no such stipulation in her contract. “They wanted to create this idea in people’s minds that Natalie was some kind of prodigy or so gifted in dance and really worked so hard to make herself a ballerina in a year and a half for the movie, basically because of the Oscar,” says Lane. “It is demeaning to the profession and not just to me. I’ve been doing this for 22 years…. Can you become a concert pianist in a year and a half, even if you’re a movie star?”...'' ]
[ Give Lane a break! This in no way disparages nor diminishes Portman's acting performance or the film which I found to be superb (which I attribute to my own personal fascination with viewing female ballet dancing) though my pick for Oscar was 'Inception' by Nolan. ] [ Drudgereport: FADE: OSCAR RATINGS DOWN 10% ...
Injury Added to Insult... [ In terms of production value (rich in content in every way), I believe this to be as good and in my view better than ever as award ceremonies can be without the inimitable Bob Hope. I believe any falloff can be directly attributable to last year the academy’s egregious misstep in overlooking ‘Avatar’ / Cameron presaging a similar fate concerning my clear choice of ‘Inception’ / Nolan ( Truth be told, I’ve yet to see ‘The King’s Speech’ failing to muster any enthusiasm for seeing a film centered around a ‘so-called royal’ trying to over-come a speech impediment, albeit a minor one, regardless of circumstances; viz., stuttering, though I would concede that it was probably well done. We all know of the problems attendant to english royal inbreeding…ho hum…) I did find ‘The Black Swan’ superb but attribute same to my own bias and fascination with viewing female ballet dancing). Bob Hope: Academy Awards, ‘passover’ … very funny! ]
Lohan rejects judge's plea offer in theft case (AP) [ It is common practice in the entertainment industry for 'loaners' far more expensive than the subject 'costume piece' here, to garner the benefit of the 'show and tell', particularly for this little hole in the wall in Venice. I mean, come on; this was hardly a surprise taking in a bustling store overrun by customers. Then there are the 'evidentiary' problems attendant to the venal motives of the store itself and monies received. In all, one must conclude that these invariably corrupt judges / prosecutors as corrupt steve the cooley (check out those land deals) like to bully the girls, ie., Lindsay Lohan, Winona Ryder, etc.. I'm not going to mention the guys of late who got a pass. Blatant misogyny? What else can you call it; particularly since they're letting scores of far more serious criminals out of jail, and we all know the numbers of serious violent criminals walkin' the streets with impunity in so-cal. Paris Hilton prosecutor arrested for buying cocaine (Reuters) ]
Penn State wins first title since 1953 Nittany Lions lead four schools with five All-Americans Roger Moore, NCAA.com [ I'm totally astounded … never woulda' thunk it … but with a mascot like a lion … how could they lose! ]
2011 NCAA Division I Wrestling Championships
Wells Fargo Center, Philadelphia, PA USA
March 17-19, 2011
Outstanding Wrestler - Anthony Robles, Arizona State, 125 lbs.
Team Standings - 3/20/2011
1 - 107.5 - Penn State
2 - 93.5 - Cornell
3 - 86.5 - Iowa
4 - 70.5 - Oklahoma State
5 - 65.0 - American
6 - 62.5 - Arizona State
7 - 61.0 - Minnesota
8 - 58.5 - Lehigh
9 - 57.5 - Boise State
10 - 54.5 - Wisconsin
11 - 44.0 - Stanford
12 - 43.5 - Nebraska
13 - 39.0 - Central Michigan
13 - 39.0 - Northwestern
15 - 38.5 - Michigan
16 - 38.0 - Oklahoma
17 - 37.0 - Kent State
18 - 35.5 - Maryland
19 - 35.0 - Missouri
20 - 31.5 - Iowa State
21 - 26.0 - Oregon
22 - 25.0 - Illinois
23 - 24.0 - Edinboro
23 - 24.0 - Virginia
25 - 23.5 - Indiana
26 - 22.0 - Hofstra
27 - 21.5 - Rutgers
28 - 21.0 - Wyoming
29 - 20.5 - Ohio State
30 - 18.5 - Utah Valley University
31 - 17.5 - Pennsylvania
32 - 17.0 - Cal Poly
33 - 16.0 - Virginia Tech
34 - 15.5 - Pittsburgh
35 - 12.5 - Harvard
36 - 11.5 - Bucknell
37 - 11.0 - Navy
37 - 11.0 - Old Dominion
39 - 9.0 - Buffalo
39 - 9.0 - Columbia
39 - 9.0 - Purdue
42 - 8.0 - Boston U
43 - 7.0 - Michigan State
43 - 7.0 - North Carolina
45 - 6.0 - Lock Haven
46 - 5.5 - Air Force
46 - 5.5 - Northern Iowa
48 - 5.0 - Clarion
48 - 5.0 - Duke
48 - 5.0 - Rider
51 - 4.5 - West Virginia
52 - 4.0 - North Carolina-Greensboro
52 - 4.0 - North Dakota State University
54 - 3.5 - Bloomsburg
54 - 3.5 - Northern Illinois
56 - 3.0 - Appalachian State
56 - 3.0 - Binghamton
56 - 3.0 - North Carolina State
56 - 3.0 - Ohio
60 - 2.0 - Drexel
60 - 2.0 - Northern Colorado
62 - 1.0 - Army
62 - 1.0 - Cal State Bakersfield
62 - 1.0 - Gardner-Webb
65 - 0.0 - Campbell
65 - 0.0 - Chattanooga
65 - 0.0 - Eastern Michigan
65 - 0.0 - Franklin & Marshall
65 - 0.0 - Liberty
65 - 0.0 - Millersville
65 - 0.0 - Princeton
65 - 0.0 - The Citadel
65 - 0.0 - VMI
MEDALISTS
Wt. 125
125 1st: Anthony Robles (Arizona State)
125 2nd: Matt McDonough (Iowa)
125 3rd: Brandon Precin (Northwestern)
125 4th: Ben Kjar (Utah Valley University)
125 5th: Zachary Sanders (Minnesota)
125 6th: Ryan Mango (Stanford)
125 7th: Jarrod Patterson (Oklahoma)
125 8th: James Nicholson (Old Dominion)
Wt. 133
133 1st: Jordan Oliver (Oklahoma State)
133 2nd: Andrew Hochstrasser (Boise State)
133 3rd: Andrew Long (Penn State)
133 4th: Scotti Sentes (Central Michigan)
133 5th: Tyler Graff (Wisconsin)
133 6th: Mike Grey (Cornell)
133 7th: Lou Ruggirello (Hofstra)
133 8th: Bernard Futrell (Illinois)
Wt. 141
141 1st: Kellen Russell (Michigan)
141 2nd: Borislav Novachkov (Cal Poly)
141 3rd: Michael Thorn (Minnesota)
141 4th: Montell Marion (Iowa)
141 5th: James Kennedy (Illinois)
141 6th: Todd Schavrien (Missouri)
141 7th: Zack Bailey (Oklahoma)
141 8th: Zack Kemmerer (Pennsylvania)
Wt. 149
149 1st: Kyle Dake (Cornell)
149 2nd: Frank Molinaro (Penn State)
149 3rd: Jason Chamberlain (Boise State)
149 4th: Ganbayar Sanjaa (American)
149 5th: Jamal Parks (Oklahoma State)
149 6th: Andrew Nadhir (Northwestern)
149 7th: Kevin LeValley (Bucknell)
149 8th: Derek Valenti (Virginia)
Wt. 157
157 1st: Bubba Jenkins (Arizona State)
157 2nd: David Taylor (Penn State)
157 3rd: Steve Fittery (American)
157 4th: Derek St. John (Iowa)
157 5th: Adam Hall (Boise State)
157 6th: Jason Welch (Northwestern)
157 7th: Bryce Saddoris (Navy)
157 8th: Walter Peppelman (Harvard)
Wt. 165
165 1st: Jordan Burroughs (Nebraska)
165 2nd: Tyler Caldwell (Oklahoma)
165 3rd: Andrew Howe (Wisconsin)
165 4th: Colt Sponseller (Ohio State)
165 5th: Shane Onufer (Wyoming)
165 6th: Josh Asper (Maryland)
165 7th: Brandon Hatchett (Lehigh)
165 8th: Paul Gillespie (Hofstra)
Wt. 174
174 1st: Jonathan Reader (Iowa State)
174 2nd: Nick Amuchastegui (Stanford)
174 3rd: Edward Ruth (Penn State)
174 4th: Mack Lewnes (Cornell)
174 5th: Colby Covington (Oregon State)
174 6th: Christopher Henrich (Virginia)
174 7th: Mike Letts (Maryland)
174 8th: Ben Bennett (Central Michigan)
Wt. 184
184 1st: Quentin Wright (Penn State)
184 2nd: Robert Hamlin (Lehigh)
184 3rd: Grant Gambrall (Iowa)
184 4th: Steve Bosak (Cornell)
184 5th: Christopher Honeycutt (Edinboro)
184 6th: Joe LeBlanc (Wyoming)
184 7th: Travis Rutt (Wisconsin)
184 8th: Kevin Steinhaus (Minnesota)
Wt. 197
197 1st: Dustin Kilgore (Kent State)
197 2nd: Clayton Foster (Oklahoma State)
197 3rd: Cam Simaz (Cornell)
197 4th: Trevor Brandvold (Wisconsin)
197 5th: Luke Lofthouse (Iowa)
197 6th: Zack Giesen (Stanford)
197 7th: Sonny Yohn (Minnesota)
197 8th: Matt Powless (Indiana)
Wt. 285
285 1st: Zachery Rey (Lehigh)
285 2nd: Ryan Flores (American)
285 3rd: Dominque Bradley (Missouri)
285 4th: Jarod Trice (Central Michigan)
285 5th: Ricardo Alcala (Indiana)
285 6th: Spencer Myers (Maryland)
285 7th: Anthony Nelson (Minnesota)
285 8th: Levi Cooper (Arizona State)
PHILADELPHIA, Pa. – The Penn State University math majors were working during Saturday’s first session.
With the program’s first championship since 1953 within reach, it wasn’t a matter of ‘if’, but ‘when.’
When Wisconsin’s Tyler Graff beat Cornell’s Mike Grey for fifth place at 133 and PSU’s Andrew Long rallied to beat Central Michigan’s Scotti Sentes for third at the same weight, the Nittany Lion lead was 102.5 to 88.5, a 14-point advantage ahead of Cornell.
Fittingly, when Penn State’s Ed Ruth and Cornell’s Mack Lewnes didn’t end with a pin – in Lewnes’ favor – the team title was mathematically clinched.
“This is a real tough tournament. Things go your way sometimes and sometimes they don’t,” said second-year Nittany Lion coach Cael Sanderson after Ruth’s victory against Lewnes. “You just have to want it and you can see it the kids’ eyes before they wrestle. I really liked the way guys wrestled this week.
“Our guys today did a great job. They made it really easy for our guys in the finals. Now they can just focus on going out there and chasing their dream.”
Ruth had to injury default his quarterfinal match to Stanford’s Nick Amuchastegui on Friday morning. There was questions as to whether he could come back.
Ruth, the No. 2 seed at 174, came back with a 7-6 win and a 42-second pin on Friday night. After beating Virginia’s Chris Henrich, he finished off Lewnes and Cornell.
“It’s a big honor [to clinch the team title],” Ruth said. “I was thinking of my knee and all the things that could go wrong and all the things that could go right.”
Added Sanderson, “To do that as freshman, to have that kind of frustration and then come back to beat some tough kids, it really shows a lot of who Ed Ruth is. Just really proud of him.”
The battle of attrition was all-but-decided on Friday night when the Nittany Lions pushed three into the finals and the Big Red saw Lewnes, third-seed Steve Bozak and No. 1 seed Cam Simaz lose back-to-back semifinal matches.
PSU, Cornell, Iowa and Minnesota all finish with five All-Americans with Oklahoma State and American leading a pack of 10 with three apiece.
“This tournament is going to take five or six All-Americans [to win],” said Oklahoma State coach John Smith before the tournament. “And you have to have high All-Americans, a couple of guys in the finals and two or three high finishers. If you have less than five you aren’t going to have a chance.”
The Cowboys put two in the finals but only managed one other All-American – 149-pounder Jamal Parks.
Penn State’s Frank Molinaro, David Taylor and Quentin Wright still have a match to wrestle in the finals Saturday night. Sophomore 133-pounder Andrew Long bounced back from a semifinal loss to win two matches, including a pin of Cornell’s Mike Grey Saturday morning. Long, a transfer from Iowa State, lost in the 125-pound final in 2010 and finished third in 2011.
“(Long) has been a big part of this team,” Sanderson said. “He brings intensity everyday, a good attitude to practice. He was a big addition to our program.”
Iowa, winners of three consecutive team titles from 2008 to 2010, pushed just one to a final and saw Montell Marion, Derek St. John and Grant Gambrall take fourth place.
The first
Utah Valley’s Ben Kjar finished fourth at 125 pounds. The senior dropped a 4-2 decision to top-seeded Anthony Robles of Arizona State in Friday’s semifinals. After winning a bout Saturday morning, Kjar lost to Northwestern’s Brandon Precin in the third-place match.
Kjar (30-8) is the first Division I All-American in program history.
“I’m happy for the program,” said Penn State assistant coach Cody Sanderson, who was the school’s first coach in 2003 when wrestling was added. “It’s important for a young program like (Utah Valley) to have All-Americans. It’s not easy at a place like that, it takes a lot of work.
“I’m very happy for (Kjar).”
Four-timer
American’s Steve Fittery finished his career as a four-time All-American, twice in Division II for Shippensburg (Pa.) State and twice in DI for the Eagles. The Pennsylvania native, who finished this season 33-1, took third at 157 after beating Boise State’s Adam Hall and Iowa’s Dan St. John on Saturday.
Three-timers
Minnesota’s Zach Sanders, Northwestern’s Brandon Precin, Illinois’ James Kennedy, Wisconsin’s Andrew Howe, Virginia’s Chris Henrich each picked up their third All-America medal this week. Sanders, fifth at 125 pounds, and Howe, third at 165 after winning the title in 2010, will be back for one more season.
The next one?
University of Oklahoma head coach Jack Spates announced his retirement earlier this season. The Division II champion for Slippery Rock as a student-athlete in 1973 and Division I finalist in 1974 saw Jarrod Patterson, seventh at 125, and Zack Bailey, seventh at 141, finish as All-Americans in his final season.
Spates will coach one last time on the big stage Saturday night when Tyler Caldwell faces Nebraska’s Jordan Burroughs in the 165-pound final.
Word around Philadelphia is that former world champion and current assistant coach Sam Henson will take over the program which has won seven NCAA championships, the last in 1974 under Stan Abel.
Iron Man Award(s)
Maryland heavyweight Spencer Myers lost a 9-7 overtime match to Indiana’s Ricky Alcala in the first round on Thursday morning. The freshman from Selinsgrove, Pa., came back to win five matches before falling to Missouri’s Dom Bradley in the wrestleback semifinals.
Myers (30-11) wrestled seven matches in three days and took home a sixth-place medal after falling to Alcala again in the fifth-place match.
Northwestern 149-pounder Andrew Nadhir, the 11th seed, was pinned by Lehigh’s Joey Napoli in the first round. Nadhir, a senior from Michigan, had to go overtime to beat Pitt’s Dane Johnson in his first wrestleback, and again against Wyoming’s Cole Dallaserra two rounds later, on his march to a sixth-place showing.
Like Myers, Nadhir (34-7) wrestled seven matches in the tournament, losing to Oklahoma State’s Jamal Parks in the fifth-place contest. '
Budget passes, but conservatives let down (Washington Post) The compromise touted as cutting $38.5 billion would actually only cut $352 million this fiscal year, an analysis says. While that didn’t prevent the budget from passing, it could sour some Republicans. [ Come on! This 'budget deal' was a showboating scam ab initio … Davis gets this right: Davis ‘… This is how we pay off our current debts and I think bondholders are simply happy to get anything out of a country that admits it owes $15Tn (1/4 of global GDP) but probably owes closer to $60Tn (entire global GDP) in the form of unfunded liabilities. The funniest thing about this (and you have to laugh) is to see Conservative pundits get on TV and talk about how we need to cut $100Bn worth of discretionary spending to "fix" this (while continuing to spend $1Tn on the military and $1Tn on tax cuts for the top 1% each year). There is no fixing this and even a Republican said you can’t fool all of the people all of the time. THIS HOUSE OF CARDS IS TEETERING FOLKS – PLEASE BE CAREFUL OUT THERE! ‘ . Obama seeks spending cuts, taxes on wealthy (WP) [ Too little, too late for 'wobama the b' (for b*** s***) ! After all, though contraindicated, he previously extended the war criminal, moron bush tax cuts to what is now realistically perceived as 'their base' (that top 1 percent). Wobama has no credibility whatsoever, wars and all. He's just plain done! Liberals worry Obama has given up ground (WP) [ Worried? Given up ground? Are they kidding? Is this some parallel universe they're operating in? Come on! Wake up! Wobama's done! Finito! He's been and is an abject failure as president; both by what he's done as not promised and not done as promised, viz., perpetual wars and overspending, etc., and no prosecutions of the frauds on wall street, etc., respectively. He is a total failure and an embarrassment to the presidency as was his predecessor. He's totally incompetent with an innate predilection to 'zig when he should zag' … 'wobama the b' (for b*** s***) is pathetic! Quite simply, for wobama, it's too late! … Drudgereport: RASMUSSEN: President hits new low Taxpayers foot $850M bill for Wall St.’s pension fees NY Post | New York City taxpayers are helping to pay $850 million in Wall Street investment fees.
U.S. Deficit to Rise to Largest Among Major Economies, IMF Says The U.S. is set to have the largest budget deficit of major developed economies this year and should narrow it now rather than face tough adjustments in the next two years, the International Monetary Fund said.
Inflation, fueled by gas and food prices, adds to worry
White House warns of debt ‘Armageddon’
Drudgereport: Obama to Call for Higher Taxes...
DEFICIT ROCKETS 16% IN FIRST HALF OF YEAR...
Inflation Actually 'Near 10%'...
IMF: US 'lacks credibility' on debt...
U.S. response in Bahrain criticized (Washington Post) With Bahrain’s iron first tightening, the White House is facing awkward questions on its Mideast approach. [ Approach? What approach? That is, what cohesive, rational strategy can be discerned at least through the last decade to present other than a self-fulfilling, self-perpetuating, self-defeating policy that has literally alienated much of the world, even beyond that region, against america while literally bankrupting this nation. Obama seeks spending cuts, taxes on wealthy (WP) [ Too little, too late for 'wobama the b' (for b*** s***) ! After all, though contraindicated, he previously extended the war criminal, moron bush tax cuts to what is now realistically perceived as 'their base' (that top 1 percent). Wobama has no credibility whatsoever, wars and all. He's just plain done! Liberals worry Obama has given up ground (WP) [ Worried? Given up ground? Are they kidding? Is this some parallel universe they're operating in? Come on! Wake up! Wobama's done! Finito! He's been and is an abject failure as president; both by what doing what he promised not to, and not doing what he promised to do, viz., perpetual wars and overspending, etc., and no prosecutions of the frauds on wall street, etc., respectively. He is a total failure and an embarrassment to the presidency as was his predecessor. He's totally incompetent with an innate predilection to 'zig when he should zag' … 'wobama the b' (for b*** s***) is pathetic! Quite simply, for wobama, it's too late! … Drudgereport: RASMUSSEN: President hits new low
New World Powers Push for End of Dollar Dominance Reuters | The BRICS group of emerging-market powers kept up the pressure on Thursday for a revamped global monetary system that relies less on the dollar
Paper: Obama’s Speech Most ‘Dishonest in Decades’ WSJ | Obama’s toxic speech and even worse plan for deficits and debt.
Libya: All About Oil, or All About Banking? I have never before heard of a central bank being created in just a matter of weeks out of a popular uprising. This suggests we have a bit more than a rag tag bunch of rebels running around and that there are some pretty sophisticated influences.
Corrupted!: 5 Shocking Examples Of Government Corruption That Will Blow Your Mind At times it really is breathtaking how corrupted the U.S. government has become. Government corruption has become so endemic in our society that most people have just kind of accepted it as “normal”. ]
A new economic world order? (Washington Post) Brazil, Russia, India, China and S. Africa use third summit to demand restructuring of global finance. [
New World Powers Push for End of Dollar Dominance Reuters | The BRICS group of emerging-market powers kept up the pressure on Thursday for a revamped global monetary system that relies less on the dollar. Let's not kid ourselves … for the rest of the world, if not this nation, reality counts! Too many people, in too many nations (including this one), in too many ways, have been burnt by pervasively corrupt, defacto bankrupt america. Weekly Unemployment Claims Suddenly Jump Higher Wall St. Cheat Sheet 'The Department of Labor’s Unemployment Insurance Weekly Claims Report was released this morning for last week. The 27,000 increase in claims is on top of a 3,000 upward revision to the previous week’s claims. Here is the official statement from the Department of Labor: …' [ Spare yourself their mindless b*** s***/statement. Do you know how many points on the dow, etc., that b.s. story was good for... then there's the 'stopped looking fudge factor'. ] [ Worthless dollar, high metals, high oil price rally on wall street … riiiiight! ] Trade Data is Bleak: Exports Down, Imports Down, Growth Estimates Down
Dow, S&P inch up as growth questioned, Google off late (Reuters) Stocks that outperform in a weak economy helped the Dow and S&P 500 eke out gains on Thursday as concerns about faltering growth and inflation prompted investors to seek out less volatile na...
Earnings Help DJIA Turn a Bad Day Good [ Earnings? Are people dreaming … blocking … repressing reality? Kaspar '… ... growth in earnings have been artificially manufactured...
· The change in accounting rules for the financial sector by FASB has generated massive “false” accounting profits beginning in 2009.
· The extended (and then further extended) unemployment benefits have kept an artificially higher demand for consumer consumption. As a result, the US government has artificially subsidized corporate profits.
· The billions saved through “free loading” by homeowners who have defaulted on their mortgages yet maintained their residence, thus living without a mortgage payment.
· The artificially suppressed interest rates.
So, not only do we have a valuation bubble, but the earnings on which the projections are based are non-sustaining... same overvaluation situation as a few years ago … nothing fixed ...' ]
Congress OKs big budget cuts, bigger fights await (AP) [ Record? Come on! Wake up! In todays evermore worthless dollars, and compared to the record, insurmountable debt? They're dreamin'! Barely covers annual interest! ]
Shut out of ownership? (Washington Post) Officials criticize White House proposal to push home buyers to come up with 20% down payments. [ And especially in this economy … things are much worse than they are 'letting on' … take a look at these realistically dismal charts from of all places, the St. Louis fed for a more sobering view: 10 Scary Charts: A 'Post-Recession' Economy Wake Up Call Kavadas 'I find the following 10 charts to be disturbing. These charts would be disturbing at any point in the economic cycle; that they depict such a tenuous situation now – 21 months after the official (as per the 9-20-10 NBER announcement) June 2009 end of the recession – is especially notable.
...
These following charts are from the St. Louis Federal Reserve:
Housing starts (last updated 3-16-11):
(Click to enlarge)
The Federal Deficit (last updated 2-17-11):
(Click to enlarge)
Federal Net Outlays (last updated 2-17-11):
(Click to enlarge)
State & Local Personal Income Tax Receipts (% Change from Year Ago)(last updated 3-25-11):
(Click to enlarge)
Total Loans and Leases of Commercial Banks (% Change from Year Ago)(last updated 4-11-11):
(Click to enlarge)
Bank Credit – All Commercial Banks (% Change from Year Ago)(last updated 4-11-11):
(Click to enlarge)
M1 Money Multiplier (last updated 4-7-11):
(Click to enlarge)
Median Duration of Unemployment (last updated 4-1-11):
(Click to enlarge)
This next chart is from the CalculatedRisk.com blog post of 4-1-11, and it shows (in red) the relative length and depth of this downturn and subsequent recovery from an employment perspective:
(Click to enlarge)
This last chart is of the Chicago Fed National Activity Index and it depicts broad-based economic activity (last updated 3-21-11):
http://static.seekingalpha.com/uploads/2011/4/14/saupload_cfnai_monthly_ma3_3_21_11.png
(Click to enlarge)
…' ]
Clinton predicts violent spring in Afghanistan (Washington Post) Secretary of State Hillary Clinton on Thursday warned NATO allies not to abandon Afghanistan and predicted a violent spring in the war there. [ Well, there you go … something to look forward to … sounds like a plan … you know, that progress thing so touted by gates / petraeus … and don't be surprised if in a symbolic gesture to drive home her non-message that she plant some forget-me-nots in the ever growing cemeteries which realistically remind us that these people, particularly innocent civilians, died for no good reason at all. Then again there's america's defacto bankruptcy. 'Alas, poor america … a nation of infinite jest, and unexcellent fancy … and pervasive criminality' … Barry Bonds Faces Jail Time While Wall Street Execs Sit Pretty Touryalai ' … Senate’s Permanent Subcommittee on Investigations released the findings of a 2-year investigation around Wall Street’s bad behavior leading up the financial crisis. The report concluded that Wall Street firms contaminated the U.S. financial system with toxic mortgages and engaged in conflicts of interest. Goldman Sachs’ behavior was especially egregious according to the report, and Senator Carl Levin wants everyone to know it. In fact, he hopes to see the “great vampire squid” face criminal charges for allegedly lying in its 2010 testimony before Congress.“In my judgment, Goldman clearly misled their clients and they misled the Congress,” he said.So now, Levin plans to refer that testimony to the Department of Justice (which has the power to bring criminal charges) and the Securities and Exchange Commission (which has authority to bring civil charges and fines and already did against Goldman when it settled for $550 million.)But will Levin’s threats amount to any criminal action against Goldman? Probably not ... it seems like Levin isn’t even going after Goldman for any of its actual business activity rather he’s accusing the firm’s executives like CEO Lloyd Blankfein of lying before Congress. Here’s the problem with that: the question and answer session between Senators and executives during the testimony was so incredibly rife with unclarity and so confusing that it would be hard to accuse the executives of willingly giving false answers.Bill Singer, a veteran Wall Street securities lawyer and Forbes contributor says the senators’ questions were so tactless and fuzzy that they allowed for extremely indirect answers by executives. Singers says the testimony made him “wince” when he heard the “incompetent” Congress members deliver speeches and follow them up with inept questions...' Former fund manager charged (WP) [ Joseph F. Skowron III accused of insider trading. Drudgereport: Senate panel slams Goldman in scathing crisis report... (Goldman clearly misled their clients and they misled Congress … referring this matter to the Justice Department and to the SEC) ]
Weekly Unemployment Claims Suddenly Jump Higher Wall St. Cheat Sheet 'The Department of Labor’s Unemployment Insurance Weekly Claims Report was released this morning for last week. The 27,000 increase in claims is on top of a 3,000 upward revision to the previous week’s claims. Here is the official statement from the Department of Labor: …' [ Spare yourself their mindless b*** s***/statement. Do you know how many points on the dow, etc., that b.s. story was good for... then there's the 'stopped looking fudge factor'. ] [ Worthless dollar, high metals, high oil price rally on wall street … riiiiight! ] Trade Data is Bleak: Exports Down, Imports Down, Growth Estimates Down
Dow, S&P inch up as growth questioned, Google off late (Reuters) Stocks that outperform in a weak economy helped the Dow and S&P 500 eke out gains on Thursday as concerns about faltering growth and inflation prompted investors to seek out less volatile na...
Earnings Help DJIA Turn a Bad Day Good [ Earnings? Are people dreaming … blocking … repressing reality? Kaspar '… ... growth in earnings have been artificially manufactured...
· The change in accounting rules for the financial sector by FASB has generated massive “false” accounting profits beginning in 2009.
· The extended (and then further extended) unemployment benefits have kept an artificially higher demand for consumer consumption. As a result, the US government has artificially subsidized corporate profits.
· The billions saved through “free loading” by homeowners who have defaulted on their mortgages yet maintained their residence, thus living without a mortgage payment.
· The artificially suppressed interest rates.
So, not only do we have a valuation bubble, but the earnings on which the projections are based are non-sustaining... same overvaluation situation as a few years ago … nothing fixed ...' ]
Congress OKs big budget cuts, bigger fights await (AP) [ Record? Come on! Wake up! In todays evermore worthless dollars, and compared to the record, insurmountable debt? They're dreamin'! Barely covers annual interest! ]AP - Congress sent President Barack Obama hard-fought legislation cutting a record $38 billion from domestic spending on Thursday, bestowing bipartisan support on the first major compromise between th...
'Perfect Storm' Has Markets in Its Path
LIARS! Goldman Sachs is the Next Barry BondsWall Street Cheat Sheet 'If you hate Goldman Sachs (NYSE:GS), you’ll love today’s news. A Senate subcommittee released a new report showing how Goldman recommended four Collateralized Debt Obligations — Hudson, Anderson, Timberwolf, and Abacus — to its clients without “fully disclosing key information about those products,” or Goldman’s opinions of the securities.
To make matters worse for the firm some people describe as a “Vampire Squid“, Sen. Carl Levin said the Senators also found new evidence proving Goldman Sachs’ (NYSE:GS) executives including CEO Lloyd Blankfein may have perjured themselves during Congressional testimony given last year. Move over Barry Bonds. Steroid use didn’t abet the collapse of the US economy.
Goldman isn’t the only high profile bank (NYSE:XLF) on the coals. Deutsche Bank (NYSE:DB) committed the same scams and Washington Mutual (NYSE:JPM) “knowingly underwrote mortgages of questionable value despite warnings from their chief credit officer.”
Goldman Sachs (NYSE:GS) already agreed to pay $550 million to settle civil fraud charges over similar accusations. So, they can’t be squeaky clean. And we all know Congress is looking for more blood, so I think Blankfein and friends better be taking notes on how everything plays out with Barry Bonds.
Goldman may also consider spending less time issuing bearish analyst notes on Oil and more on the operation in their own building.'
Barry Bonds Faces Jail Time While Wall Street Execs Sit Pretty Touryalai ' … Yesterday, the Senate’s Permanent Subcommittee on Investigations released the findings of a 2-year investigation around Wall Street’s bad behavior leading up the financial crisis. The report concluded that Wall Street firms contaminated the U.S. financial system with toxic mortgages and engaged in conflicts of interest.Goldman Sachs’ behavior was especially egregious according to the report, and Senator Carl Levin wants everyone to know it.In fact, he hopes to see the “great vampire squid” face criminal charges for allegedly lying in its 2010 testimony before Congress.“In my judgment, Goldman clearly misled their clients and they misled the Congress,” he said.So now, Levin plans to refer that testimony to the Department of Justice (which has the power to bring criminal charges) and the Securities and Exchange Commission (which has authority to bring civil charges and fines and already did against Goldman when it settled for $550 million.)But will Levin’s threats amount to any criminal action against Goldman? Probably not.First, it seems like Levin isn’t even going after Goldman for any of its actual business activity rather he’s accusing the firm’s executives like CEO Lloyd Blankfein of lying before Congress. Here’s the problem with that: the question and answer session between Senators and executives during the testimony was so incredibly rife with unclarity and so confusing that it would be hard to accuse the executives of willingly giving false answers.Bill Singer, a veteran Wall Street securities lawyer and Forbes contributor says the senators’ questions were so tactless and fuzzy that they allowed for extremely indirect answers by executives. Singers says the testimony made him “wince” when he heard the “incompetent” Congress members deliver speeches and follow them up with inept questions...' Former fund manager charged (Washington Post) [ Joseph F. Skowron III accused of insider trading. Drudgereport: Senate panel slams Goldman in scathing crisis report... (Goldman clearly misled their clients and they misled Congress … referring this matter to the Justice Department and to the SEC)
Equity Valuations Are Forming the Second Biggest Bubble in U.S. History Kaspar 'Despite the terrible economic performance of the past ten years, equity valuations are the 2nd largest bubble in U.S. history... the cause and the potential ramifications of this are astounding.
Exhibit one: The cyclically-adjusted price-to-earnings ratio, or CAPE.
This is not a “fad” valuation metric. CAPE dates back to 1871, offering 140 years worth of data, during which time, the mean price-to-earnings ratio is 16.
According to Yale University’s Dr. Robert Shiller, the market is now 41% overvalued according to this valuation metric. The only time the markets have been more overvalued was a few brief months in 1929 and the tech bubble.
[chart http://static.seekingalpha.com/uploads/2011/4/12/saupload_cape_thumb1.png ]
Exhibit 2: The Q ratio, which measures total market value compared to its replacement cost.
The Q-ratio data in the chart below dates back to 1900. According to the data, the markets have now surpassed the 1929 peak valuation by over 8%.
[chart http://static.seekingalpha.com/uploads/2011/4/12/saupload_q_ratio_thumb1.png ]
… bubbles turn a believable story/trend into an overvaluation. In the 1700s during the South Sea Bubble...Railroading prospects induced a bubble in the late 1800s ... In the 1920s, a bubble … A similar life-changing invention – the Internet – swept the attention of investors in the 1990s ...
What is the story today? The prospect of inflation? High unemployment?
Exhibit 3: The gap between projected 12-month earnings against the 10-year average
... the market is stretching this reversion greater than 2000 and 2007!
[chart http://static.seekingalpha.com/uploads/2011/4/12/saupload_gap_between_12_month_average_thumb1.png ]
... growth in earnings have been artificially manufactured...
· The change in accounting rules for the financial sector by FASB has generated massive “false” account profits beginning in 2009.
· The extended (and then further extended) unemployment benefits have kept an artificially higher demand for consumer consumption. As a result, the US government has artificially subsidized corporate profits.
· The billions saved through “free loading” by homeowners who have defaulted on their mortgages yet maintained their residence, thus living without a mortgage payment.
· The artificially suppressed interest rates.
So, not only do we have a valuation bubble, but the earnings on which the projections are based are non-sustaining... same overvaluation situation as a few years ago … nothing fixed ...'
U.S. Consumer Credit Puts Markets and Economy on Notice Alexandre 'I often see money supply as the headline when pointing to inflationary pressures building up in the system, but the supply of anything is not very meaningful unless it is being consumed. If I attend a party and the host drops 12 bottles of the finest wine on my lap, I will not get drunk unless I consume the mind-altering juice.
Apparently the effects of the Fed’s Quantitative Easing – or "money printing," if one wishes – are muted at best, and the so-called runaway inflation is not taking shape, although the recent oil spike is only now impacting retail food prices – mostly vegetables, fruit, and dairy -- and has added a few percentage points to daily staples. I am aware of this because I do most of the household food shopping and can recite the current prices of a number of items, and what they were last December, although aggressive sales on a variety of items continue to take place to attract a shrinking consumer’s wallet. However, more pronounced deflationary pressures continue to erode the savings tied to real estate – the largest asset for most Americans – and will not end anytime soon.
U.S. trade balance figures were best summarized by Reuters, and came on the heels of the first Chinese trade balance negative quarter since 2004:
U.S. imports and exports fell in February, prompting analysts to cut again their forecasts for U.S. economic growth in early 2011 and showing signs of a slowing in the global recovery. The trade gap totaled $45.8 billion and was down 2.6 percent from January as imports fell faster than exports, even as oil prices hit their highest level since October 2008, the Commerce Department said on Tuesday.
U.S. retail sales delivered a mixed and weak picture, due to the high price of gasoline with 0.4% growth and 0.8% core, while previous numbers were revised up — February from 0.3% to 0.7%, and March’s sales increased to 1.1% from 1.0%. However, auto sales shrunk 1.7%, which brings us to consumer credit and how the data series is building an uneasy picture of divergence between reality and expectations. Even if one is to assume that the Fed’s quantitative easing had a hand in credit expansion, the impact was negligible and is already fading before the program ends.
http://static.seekingalpha.com/uploads/2011/4/14/765325-130278941172719-Carlos-X--Alexandre.png
Revolving credit includes credit cards, or the daily financial bread and butter for most consumers. Non-revolving is defined by the Federal Reserve Board in its release as including “automobile loans and all other loans not included in revolving credit, such as loans for mobile homes, education, boats, trailers, or vacations. These loans may be secured or unsecured.”
For the record, consumer credit expanded virtually non-stop between 1943 and 2008, then dropped precipitously into last year. Now we are observing an expansion of non-revolving, a resumption of a contraction in the revolving category, and total consumer credit displaying a little bounce and starting to descend again. Residential mortgages and home equity lines of credit are not tracked by the Fed in this report, but we know that tale from other sources.
But let’s stop a second and take a look at the non-revolving story. Of the seven types — and you can see them in the release — only “Federal Government” increased, while the other six decreased. Why? Student loans. That type of credit, although helpful to those seeking an education, is not contributing to the traditional economic engine, and without student loans, consumer credit would have been short by $9 billion – and an overall contraction.
One very interesting piece of data in the report is the “Loan-to-Value Ratio” for new car loans at auto finance companies; I see it as a little window into consumers’ demeanor. Where in 2006 the consumer was financing 94% of value, the latest reading shows a huge decline to 80% – larger cash down payments – and that is a screaming reflection of consumers’ attitudes toward debt. The table below shows that, with the exception of the “Loan-to-Value Ratio,” not much has changed between 2006 and today.
| New Car Loans by Auto Finance Companies | 2006 | 2011 |
| Interest Rate | 4.99% | 4.73% |
| Loan Maturity | 63 months | 62.3 months |
| Loan-to-Value Ratio | 94% | 80% |
| Amount Financed | $26,620 | $26,673 |
Joe and Mary Consumer are extremely conservative about their money, and no longer splurge without a second thought. Going forward, consumer attitudes have changed considerably, are here to stay, and are not priced in the markets. The fallout will be felt for a very long time, and for those who state that the American consumer is not that important in a global sense, time will tell – and the cracks are already showing...'
10 Scary Charts: A 'Post-Recession' Economy Wake Up Call Kavadas 'I find the following 10 charts to be disturbing. These charts would be disturbing at any point in the economic cycle; that they depict such a tenuous situation now – 21 months after the official (as per the 9-20-10 NBER announcement) June 2009 end of the recession – is especially notable.
These charts raise a lot of questions. As well, they highlight the "atypical" nature of our economic situation from a long-term historical perspective. I regularly discuss many troubling characteristics of our economy in this EconomicGreenfield.com blog.
All of these charts (except one, as noted) are from the Federal Reserve, and represent the most recently updated data.
These following charts are from the St. Louis Federal Reserve:
Housing starts (last updated 3-16-11):
(Click to enlarge)
The Federal Deficit (last updated 2-17-11):
(Click to enlarge)
Federal Net Outlays (last updated 2-17-11):
(Click to enlarge)
State & Local Personal Income Tax Receipts (% Change from Year Ago)(last updated 3-25-11):
(Click to enlarge)
Total Loans and Leases of Commercial Banks (% Change from Year Ago)(last updated 4-11-11):
(Click to enlarge)
Bank Credit – All Commercial Banks (% Change from Year Ago)(last updated 4-11-11):
(Click to enlarge)
M1 Money Multiplier (last updated 4-7-11):
(Click to enlarge)
Median Duration of Unemployment (last updated 4-1-11):
(Click to enlarge)
This next chart is from the CalculatedRisk.com blog post of 4-1-11, and it shows (in red) the relative length and depth of this downturn and subsequent recovery from an employment perspective:
(Click to enlarge)
This last chart is of the Chicago Fed National Activity Index and it depicts broad-based economic activity (last updated 3-21-11):
http://static.seekingalpha.com/uploads/2011/4/14/saupload_cfnai_monthly_ma3_3_21_11.png
(Click to enlarge)
I will update these charts on an intermittent basis as they deserve close monitoring ...'
Consumers spend more, but on gas (Washington Post) [ Retail Sales Miss Expectations Wall St. Cheat Sheet On Wednesday April 13, 2011, 9:40 am EDT 'The U.S. Census Bureau announced today that advance estimates of U.S. retail and food services sales for March, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $389.3 billion, an increase of 0.4 percent from the previous month, and 7.1 percent above March 2010. Analysts were expecting a rise of 0.5 percent...' Retail sales? Where? The mall? If they can find one with stores … Drudgereport: Malls hit highest vacancy in 11 years... This is the grim economic reality http://albertpeia.com/grimreality.htm . A Trading System That Challenges the Efficient Market Hypothesis [ ...What parallel universe is McCurdy operating in? Even in the heyday of that so-called hypothesis, close examination of the data indicated that if you weren't timing the market you were, in a somewhat 'Charlie Sheenish' manner of speaking, duh! … losing! (my MBA Thesis, 1977, NYU GBA, Finance – which required study / mastery of such math intensive theory). Said 'hypothesis' wasn't true then and certainly isn't true today where complex computer-programming can and does artificially produce the various criteria / buy / sell / signals alluded to in the article (they're widely known / followed) creating the rigged / fraudulent trading game geared to maximized the 'churn-and-earn' commission profits (net negative in economic terms) and enabling the passing of 'those hot potatoes'/paper shares in a manner that resembles a game of musical chairs with those not in the loop winding up holding the bag (including pension funds, etc.); all the while funding those lavish lifesyles / over-compensation of the frauds on wall street along with the direct / indirect bribes inuring them from stigma and as well, insulating them from proper scrutiny and prosecution. Fundamentals, fundamental rational analysis has become virtually irrelevant to these now fraud-prone markets like never before in history facilitating frauds of magnitudes that have made the rationalization 'too big to fail' a byword... The frauds on wall street et als should be criminally prosecuted, jailed, fined, and disgorgement imposed. Dave's Daily 'If you can keep interest rates this low this long, its inevitable cheap financing can allow companies to start cobbling each other up. Further Ben's policies allow companies like IBM to sell bonds at 1% and buy back shares with the proceeds (total paper bubble-scam). POMO is occurring almost daily and Primary Dealers can buy back their shares and pay dividends with what essentially is taxpayer money-- … an especially great opportunity to sell / take profits while you still can since there's much worse to come! ]
Bretton Woods II-attendee Joseph Stiglitz advocates global reserve currency RT | Fmr. World Bank Chief Economist says the US dollar as the reserve currency is hurting the entire world.
More Americans leaving workforce USA Today | Only 45.4% of Americans had jobs in 2010, the lowest rate since 1983.
Jobless Claims Unexpectedly Rise; Inflation Pressure Grows CNBC | Initial claims for state unemployment benefits rose 27,000 to a seasonally adjusted 412,000, the Labor Department said.
Goldman Sachs misled Congress after duping clients, Senate panel chairman says
Bloomberg | Goldman Sachs misled clients and Congress about the firm’s bets on securities tied to the housing market.
BRICS demand global monetary shake-up, greater influence The BRICS group of emerging-market powers kept up the pressure on Thursday for a revamped global monetary system that relies less on the dollar and for a louder voice in international financial institutions.
Gold prices to strike records ‘above $1,600 this year’ Record-breaking gold will likely surge past $1,600 per ounce for the first time later this year, driven by fears over high inflation and low global interest rates, consultancy GFMS forecast Wednesday.
Change: Percent Of Americans Working Lowest Since Reagan The share of the population that is working fell to its lowest level last year since women started entering the workforce in large numbers three decades ago, a USA TODAY analysis finds.
The Budget Deal Turns Out To Be A Gigantic Fraud Originally the deal between The White House and Congressional Republicans was touted for delivering $38 billion in cost savings.
(4-14-11) Dow 12,285 +14 Nasdaq 2,760 -1 S&P 500 1,314 -0- [CLOSE- OIL $109.19 (-54% for year 2008) (RECORD TRADING HIGH $147.27) GAS $3.69 (reg. gas in LAND OF FRUITS AND NUTS $4.07 REG./ $4.14 MID-GRADE/ $4.22 PREM./ $4.27 DIESEL) / GOLD $1,476 (+24% for year 2009) / SILVER $42.22 (+47% for year 2009) PLATINUM $1,790 (+56% for year 2009) Metal News for the Day / DOLLAR= .69 EURO, 83 YEN, .60 POUND STERLING, ETC. (How low can you go - LOWER)/ Interest Rates: http://www.treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=yield 10 YR NOTE YIELD 3.51% …..… AP Business Highlights ...Yahoo Market Update... T. Rowe Price Weekly Recap – Stocks / Bonds / Currencies - Domestic / International This Is a Secular Bear Market and The End of Buy and Hold … and Hope The bull market that never was/were beyond wall street b.s. when measured in gold ‘WORST ECONOMIC COLLAPSE EVER’ Must Read Economic / Financial Data This Depression is just beginning The coming depression… thecomingdepression.net The Next Wave of Collapse is Coming Sooner than you think Sliding Back Into the Great Depression ABSOLUTELY, ABSURDLY, RIDICULOUS! SELL / TAKE PROFITS WHILE YOU CAN SINCE MUCH, MUCH WORSE TO COME!
National / World
Alex Jones: We’re Not Your Slaves! Infowars | Alex takes a call from a chicago women who says the school system there has been corrupt for many years.
SWAT Attacks Home School Mom for Refusing to Force Med Child Kurt Nimmo | CPS works with SWAT team to grab home schooled child for refusing to take dangerous drug Risperdal.
TSA Gropes 8-Year Old Boy, In Front Of Outraged Mother Steve Watson | Ms Shehan quickly grabbed her camera and took photos to document the incident.
Red Pill Review: Police State 4 – The Rise of FEMA William Walbut | This review from our Red Pill Documentaries page covers Police State 4-The Rise of FEMA.
Obama, Boehner Budget Deal Increases Deficit Kurt Nimmo | Bernanke and the Fed are doing the best job they can to enslave you and your children.
Banks Face $3.6 Trillion ‘Wall’ of Debt: IMF Reuters | The world’s banks face a $3.6 trillion “wall of maturing debt” in the next two years.
Globalists Positioned to Exploit Japan’s Tragedy Tony Cartalucci | America couldn’t offer Japan much help even if they wanted to.
New World Powers Push for End of Dollar Dominance Reuters | The BRICS group of emerging-market powers kept up the pressure on Thursday for a revamped global monetary system that relies less on the dollar
Paper: Obama’s Speech Most ‘Dishonest in Decades’ WSJ | Obama’s toxic speech and even worse plan for deficits and debt.
Nuclear expert Fuksushima 1000 Time Worse Than Engineers Ever Anticipated Arnold Gundersen discusses the Fukushima Accident Severity Level Being Raised to Level 7, saying the Fukushima disasters is 1,000 times worse than the nuclear engineers who built the plant ever anticipated.
Libya: All About Oil, or All About Banking? I have never before heard of a central bank being created in just a matter of weeks out of a popular uprising. This suggests we have a bit more than a rag tag bunch of rebels running around and that there are some pretty sophisticated influences.
Busby: 400,000 to develop cancer in 200 km radius of Fukushima Engineers at Japan’s Fukushima plant continue work on emptying highly radioactive water from one of the nuclear reactors. The latest tests show that radiation levels in the sea near the damaged facility have spiked.
Corrupted!: 5 Shocking Examples Of Government Corruption That Will Blow Your Mind At times it really is breathtaking how corrupted the U.S. government has become. Government corruption has become so endemic in our society that most people have just kind of accepted it as “normal”.
Drudgereport: BUCHANAN: Obama blows up the bridge...
Tiny Tim (geithner): YOU WILL GIVE ME MORE MONEY
OBAMA CALLS NEW TAXES 'SPENDING REDUCTIONS IN TAX CODE'...
RYAN: 'Dramatically inaccurate,' 'hopelessly inadequate'...
CANTOR: Raising taxes 'is not the answer'...
Obama's Support Among Poor Drops to All-time Low...
Left's angst grows over president's 'shift to center'...
Pentagon Warns Obama Against Deeper Defense Cuts ... (And where is it going to come from ... I've said before, and it's still true today, that we've already had in pervasively corrupt, defacto bankrupt, war crimes nation america a defacto coup d'etat) ...
GOOGLE: IT'S A MISS
BANKS FACE $3,600,000,000,000 IN DEBT (and then there's the trillions in worthless, paper, toxic assets / securities that are being carried 'new FASB rule change defacto bankrupt american style)...
RISE OF NEW WORLD POWER[WITHOUT USA]...
SHOCK: CBO Says Budget Deal Will Cut Spending by Only $352 Million...
Libya Rebels in 'hopeless disarray'...
Seek $2 Billion Loan...
NATO short of planes...
Senate panel slams Goldman in scathing crisis report... (...Goldman clearly misled their clients and they misled Congress … referring this matter to the Justice Department and to the SEC … )
NBC: Rev. Jesse Jackson Subject of Gay Harassment Complaint...
Duke lacrosse rape accuser faces more charges...
Man Mangum accused of stabbing dies...
JOBLESS CLAIMS RISE; INFLATION PRESSURE GROWS...
Suicide Rates Rise...
Consumers Hardest Hit by Oil Shock...
NEW WORLD POWERS PUSH FOR END OF DOLLAR DOMINANCE...
New York, San Diego no longer have white majorities...
'Embarrassing' Sarkozy biopic to debut at Cannes.. A biopic of Nicolas Sarkozy that charts his rise to power and break-up of his marriage has been selected for the Cannes Film Festival, threatening to turn the unpopular French president into an international laughing stock ... The premiere spells potential embarrassment for Mr Sarkozy and could dent his bid for a second presidential term at a time when his disapproval rating amongst the French electorate stands at 74 per cent'
BUCHANAN: Obama blows up the bridge... "Rather than building bridges, he's poisoning wells," said Rep. Paul Ryan, after listening to Barack Obama's scathing attack on his deficit-reduction plan as a shredding of America's social contract with the elderly and poor.
Ryan is right. Yet, with Obama's partisan savagery, virtually calling the GOP plan immoral, we have clarity.
There will be no grand bipartisan bargain on taxes and spending.
The two parties on Capitol Hill and the president will not be coming together to solve the gravest financial and fiscal crisis America has faced since the Great Depression. Between them today is a high wall and a deep ditch.
The heart of the Ryan plan is to turn Medicaid into block grants to the states, so each can decide for itself how best to use the funds, and to convert Medicare into a program where the U.S. government would provide citizens with the funds and freedom to chose whatever health insurance they wished to buy.
Obama denounced both.
But if the Republican Medicare and Medicaid proposals are dead on arrival in Harry Reid's Senate and Obama's White House, Obama's plan to raise taxes is equally lifeless.
On MSNBC's "Morning Joe," this writer asked Grover Norquist of Americans for Tax Reform exactly how many GOP members of the House had taken his pledge not to raise taxes.
His response: "The commitment that 235 Republican members of the House and 40 Republicans in the Senate have signed is the Taxpayer Protection Pledge – it says no raising taxes. So, taxes are off the table."
Seems clear. But if virtually every GOP member of the House and 40 GOP senators have signed a pledge not to raise taxes, how can they dishonor that pledge?
How could they agree to raise the top U.S. income tax rate back up to the 40 percent of the Bill Clinton era, as Obama demands, then go home and tell voters they had no choice, that to get a deal with Reid and Obama they had to let the government take a larger share of the income of American citizens?
They cannot.
Put bluntly, a vote by a Republican House to raise taxes as part of a big budget deal would be an act of collective suicide by the party of Speaker John Boehner.
And the Democrats?
With the exception of the civil rights acts of the 1960s, no programs are more hallowed in party mythology than Medicare, Medicaid and Social Security.
Are Democrats, after the "shellacking" of 2010, going to go home and tell their constituents they voted to cut Medicaid benefits?
Are they going to tell the old folks of the Greatest Generation and the Silent Generation and the retiring baby boomers that Medicare in the future will not be as generous as it has been in the past, that we are going to have to start rationing their health care?
The new Republican governors – Scott Walker in Wisconsin, John Kasich in Ohio, Chris Christie in New Jersey, Tom Corbett in Pennsylvania – all have resisted raising taxes, as has Andrew Cuomo, Democrat of New York, who enjoys remarkably high poll numbers for the times we live in.
The praise these governors are receiving, even when embattled, has also steeled the spine of congressional Republicans against any tax increase.
But if Democrats are not going to do even minor surgery on Medicare and Medicaid and Republicans are not going to raise taxes, there is no hope of big budget deal to cut a deficit now running at 11 percent of gross domestic product.
And that raises another question.
How long can the Federal Reserve continue financing these deficits?
China, choking on U.S. debt, is reportedly beginning to divest itself of U.S. bonds. Japan will need to sell U.S. bonds to get hard currency to repair the damage from the earthquake and tsunami. And the Fed is about to end its QE2 monthly purchases of $100 billion in U.S. bonds.
Where is the Fed going to borrow the $125 billion a month to finance this year's deficit of $1.65 trillion, and another of comparable size in 2012?
Bill Gross' Pimco, the world's largest bond fund, has sold all his U.S. bonds and begun to short U.S. debt. Pimco is betting that the value of U.S. Treasury bonds will begin to fall.
We may be about to enter a maelstrom.
No big budget deal is brokered. The deficit endures, and another looms in 2012. To finance them, the Fed borrows at the rate of $30 billion a week wherever it can.
But as countries begin to choke on U.S. debt, the market starts to dry up. To attract investors, the Fed must raise interest rates, which sends bond prices sinking and forces interest rates up across the economy.
With interest rates rising, gas prices rising and inflation rising, the squeeze is on, and there is talk of a double-dip recession.
And if that happens, Obama is toast. But, then, so are we.'
Consumers spend more, but on gas (Washington Post) [ Retail Sales Miss ExpectationsWall St. Cheat Sheet On Wednesday April 13, 2011, 9:40 am EDT 'The U.S. Census Bureau announced today that advance estimates of U.S. retail and food services sales for March, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $389.3 billion, an increase of 0.4 percent from the previous month, and 7.1 percent above March 2010. Analysts were expecting a rise of 0.5 percent...'
Where? The mall? If they can find one with stores … Drudgereport: Malls hit highest vacancy in 11 years... This is the grim economic reality http://albertpeia.com/grimreality.htm . A Trading System That Challenges the Efficient Market Hypothesis [ ...What parallel universe is McCurdy operating in? Even in the heyday of that so-called hypothesis, close examination of the data indicated that if you weren't timing the market you were, in a somewhat 'Charlie Sheenish' manner of speaking, duh! … losing! (my MBA Thesis, 1977, NYU GBA, Finance – which required study / mastery of such math intensive theory) Said 'hypothesis' wasn't true then and certainly isn't true today where complex computer-programming can and does artificially produce the various criteria / buy / sell / signals alluded to in the article (they're widely known / followed) creating the rigged / fraudulent trading game geared to maximized the 'churn-and-earn' commission profits (net negative in economic terms) and enabling the passing of 'those hot potatoes'/paper shares in a manner that resembles a game of musical chairs with those not in the loop winding up holding the bag (including pension funds, etc.); all the while funding those lavish lifesyles / over-compensation of the frauds on wall street along with the direct / indirect bribes inuring them from stigma and as well, insulating them from proper scrutiny and prosecution. Fundamentals, fundamental rational analysis has become virtually irrelevant to these now fraud-prone markets like never before in history facilitating frauds of magnitudes that have made the rationalization 'too big to fail' a byword... The frauds on wall street et als should be criminally prosecuted, jailed, fined, and disgorgement imposed. Dave's Daily 'If you can keep interest rates this low this long, its inevitable cheap financing can allow companies to start cobbling each other up. Further Ben's policies allow companies like IBM to sell bonds at 1% and buy back shares with the proceeds (total paper bubble-scam). POMO is occurring almost daily and Primary Dealers can buy back their shares and pay dividends with what essentially is taxpayer money-- … an especially great opportunity to sell / take profits while you still can since there's much worse to come! ]
Former fund manager charged (Washington Post) [ Joseph F. Skowron III accused of insider trading. Drudgereport: Senate panel slams Goldman in scathing crisis report... (Goldman clearly misled their clients and they misled Congress … referring this matter to the Justice Department and to the SEC)
Equity Valuations Are Forming the Second Biggest Bubble in U.S. History Kaspar 'Despite the terrible economic performance of the past ten years, equity valuations are the 2nd largest bubble in U.S. history... the cause and the potential ramifications of this are astounding.
Exhibit one: The cyclically-adjusted price-to-earnings ratio, or CAPE.
This is not a “fad” valuation metric. CAPE dates back to 1871, offering 140 years worth of data, during which time, the mean price-to-earnings ratio is 16.
According to Yale University’s Dr. Robert Shiller, the market is now 41% overvalued according to this valuation metric. The only time the markets have been more overvalued was a few brief months in 1929 and the tech bubble.
[chart http://static.seekingalpha.com/uploads/2011/4/12/saupload_cape_thumb1.png ]
Exhibit 2: The Q ratio, which measures total market value compared to its replacement cost.
The Q-ratio data in the chart below dates back to 1900. According to the data, the markets have now surpassed the 1929 peak valuation by over 8%.
[chart http://static.seekingalpha.com/uploads/2011/4/12/saupload_q_ratio_thumb1.png ]
… bubbles turn a believable story/trend into an overvaluation. In the 1700s during the South Sea Bubble...Railroading prospects induced a bubble in the late 1800s ... In the 1920s, a bubble … A similar life-changing invention – the Internet – swept the attention of investors in the 1990s ...
What is the story today? The prospect of inflation? High unemployment?
Exhibit 3: The gap between projected 12-month earnings against the 10-year average
... the market is stretching this reversion greater than 2000 and 2007!
[chart http://static.seekingalpha.com/uploads/2011/4/12/saupload_gap_between_12_month_average_thumb1.png ]
... growth in earnings have been artificially manufactured...
· The change in accounting rules for the financial sector by FASB has generated massive “false” account profits beginning in 2009.
· The extended (and then further extended) unemployment benefits have kept an artificially higher demand for consumer consumption. As a result, the US government has artificially subsidized corporate profits.
· The billions saved through “free loading” by homeowners who have defaulted on their mortgages yet maintained their residence, thus living without a mortgage payment.
· The artificially suppressed interest rates.
So, not only do we have a valuation bubble, but the earnings on which the projections are based are non-sustaining... same overvaluation situation as a few years ago … nothing fixed ...'
Obama seeks spending cuts, taxes on wealthy (Washington Post) [ Too little, too late for 'wobama the b' (for b*** s***) ! After all, though contraindicated, he previously extended the war criminal, moron bush tax cuts to what is now realistically perceived as 'their base' (that top 1 percent). Wobama has no credibility whatsoever, wars and all. He's just plain done! Liberals worry Obama has given up ground (Washington Post) [ Worried? Given up ground? Are they kidding? Is this some parallel universe they're operating in? Come on! Wake up! Wobama's done! Finito! He's been and is an abject failure as president; both by what he's done as not promised and not done as promised, viz., perpetual wars and overspending, etc., and no prosecutions of the frauds on wall street, etc., respectively. He is a total failure and an embarrassment to the presidency as was his predecessor. He's totally incompetent with an innate predilection to 'zig when he should zag' … 'wobama the b' (for b*** s***) is pathetic! Quite simply, for wobama, it's too late! … Drudgereport: RASMUSSEN: President hits new low Taxpayers foot $850M bill for Wall St.’s pension fees NY Post | New York City taxpayers are helping to pay $850 million in Wall Street investment fees.
U.S. Deficit to Rise to Largest Among Major Economies, IMF Says The U.S. is set to have the largest budget deficit of major developed economies this year and should narrow it now rather than face tough adjustments in the next two years, the International Monetary Fund said.
Inflation, fueled by gas and food prices, adds to worry
White House warns of debt ‘Armageddon’
Drudgereport: Obama to Call for Higher Taxes...
DEFICIT ROCKETS 16% IN FIRST HALF OF YEAR...
Inflation Actually 'Near 10%'...
IMF: US 'lacks credibility' on debt...
'Stringent Austerity Measures' Needed...
BUDGET TRICKS, SLEIGHTS OF HAND IN BUDGET DEAL...
Conservatives' criticism growing...
Budget deal axes 'czars' -- who are already gone...] The president faces a rebellion on the left, with key groups concerned that he has let the GOP message of reducing government trump that of creating jobs.
GE Not Repaying Tax Refund; AP Duped by Phony Press Release
] In a stinging rebuke to Republican budget-cutters, Obama acknowledged that the debt must be tackled faster than he has previously proposed but rejected GOP calls to make fundamental changes to Medicare and Medicaid.
AT&T, T-Mobile file merger application (Washington Post) [ I believe the simplest test to be best here; viz., 'if att wants it, it's got to be anti-competitive'. Why? Because even the simplest tasks, ie., land / long lines, etc., are beyond the capability and competence of this 'can't do' , mob-infested jersey / bushland texas regressive company; hence, their need, their hankering for monopoly power. Of course, monopoly is ingrained in the history of att and telecommunications thrived and advanced on their breakup. Quite simply, att can't compete on a level playing field … it's their story! Merger a disconnect for consumers (Washington Post) [ Yeah! True enough! I had to drop my land line (att/sbc – jersey/bushland) which I kept for the public listing and which became disfunctional / unusable to the point where it was impacting my DSL line; both of which I dropped in favor of MagicJack (I recommend it) and Time Warner Cable / Internet (also better). Deal to combine AT&T, T-Mobile raises questions (AP) [Questions? Is that all? att / sbc is a horribly managed company that can't even do the simplest things well; ie., land lines and dsl thereby, my direct experience. We've seen this all before. When they can't do, they go monopoly bigger with disasterous results. This is an old story with a familiar ending. AP - AT&T's surprise announcement that it plans to acquire T-Mobile USA will force federal regulators to confront a difficult antitrust question: Can American consumers get good wireless service at a ... ] OPINION | Your choice for wireless service would get smaller should AT&T carry out its plan to buy T-Mobile USA. ] Firm confident it will win over regulators to its bid to buy T-Mobile USA, even as critics continue to bash the deal. Here's that other story of what's 'unsaid' being very costly to the nation : On NBC, the missing story about GE (Washington Post) [ Ya think! … Seriously though, this is as important a story as can be since these scenarios have been a significant problem for the pervasively corrupt, defacto bankrupt u.s. for quite some time... (0 taxes paid)'
] A call by lawmakers for a careful review of AT&T’s proposed acquisition of T-Mobile is really more code language for something else, analysts say. ]
French, British leaders meet about Libya (Washington Post) [ Wow! Talk about sounding like a plan ... and all this time we thought they already had done that. After all, they must conserve their resources; you know, that war-prone nato alliance comprised of members almost to a nation defacto bankrupt, striving to emulate 'lead war nation' america's defacto bankrupt status. ] The countries struggled Wednesday to come up with new tactics to topple Moammar Gaddafi without resorting to further Western military intervention.
Libya: Increased Airstrikes, Ground Troops, Contractors, Civilians Killed, Deadly DU Munitions – Can We Call This A War Yet? The globalist coalition refers to it as ‘kinetic military action’, yet as more civilians are killed in NATO bombings, and with experts adamant that deadly Depleted Uranium weapons are being used by Western forces, the conflict in Libya looks a hell of a lot like the occupations of Afghanistan and Iraq all over again.
‘Depleted uranium’s toxic legacy to poison Libya for 40 years’ Military experts are accusing coalition forces in Libya of using depleted uranium in their air strikes. The deadly substance can cause cancer and physical mutations in those who come into close contact with it.
63 percent of people killed in Iraq war were civilians: report Xinhua | U.S.-led wars in Iraq and Afghanistan have been causing huge civilian casualties.
West vs. China: A New Cold War Begins On Libyan Soil Patrick Henningsen | The question as to why US-led NATO forces are determined to engineer a regime change in Libya is now becoming clear.
United Nations Installs IMF Stooge in Ivory Coast Kurt Nimmo
White House threats on Wayne Madsen must be taken seriously Wayne Madsen Report | A source, connected to the White House, gave a warning stark in its directness: “They want to kill you.”
Roberts: Pentagon budget is the result of corruption Half a century ago, president Dwight Eisenhower issued a warning to the American nation about growing military industrial complexes being a threat to democracy, and now it seems as though Eisenhower’s warning has become reality. US is the modern world’s biggest military spender. Dr. Paul Craig Roberts, a former Reagan administration official and a columnist, shares his opinion.
Japan Gov’t says radiation is escaping from containment vessels that are not “totally” destroyed ”Even though some amount of radiation keeps leaking from reactors and their containment vessels, they are not totally destroyed and are functioning,” [Hidehiko Nishiyama, spokesman for Japan's nuclear agency]
Radioactive Seaweed Detected In Puget Sound Radiation leaked from the Fukushima Daiichi nuclear power complex in Japan has been detected in seaweed in Puget Sound, but researchers say there’s no need for alarm.
Retail Sales Miss ExpectationsWall St. Cheat Sheet On Wednesday April 13, 2011, 9:40 am EDT 'The U.S. Census Bureau announced today that advance estimates of U.S. retail and food services sales for March, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $389.3 billion, an increase of 0.4 percent from the previous month, and 7.1 percent above March 2010. Analysts were expecting a rise of 0.5 percent.
Total sales for the January through March 2011 period were up 8.1 percent from the same period a year ago. The January to February 2011 percent change was revised from +1.0 percent to +1.1 percent.
Retail trade sales were up 0.3 percent from February 2011, and 7.3 percent above last year. Gasoline stations sales were up 16.7 percent from March 2010 and nonstore retailers sales were up 12.4 percent from last year.
Obviously, inflating Oil (NYSE:USO) prices are adding to gross revenues for gasoline sales. So, although retail sales are up for the ninth month in a row, drilling down to the details shows a weakening trend. If we strip out gas station sales, retail sales were up a very small 0.1%.
Motor vehicles sales dropped 1.7%. Nevertheless, Toyota Motor Corporation (NYSE:TM) is up 1.3%, Ford Motor Company (NYSE:F) is up 0.4%, General Motors (NYSE:GM) is up 0.3%, and Honda Motor Company (NYSE:HMC) is up over 3%.'
chart http://wallstcheatsheet.com/wp-content/uploads/2011/04/March-Retail-Sales.png
Chain stores post increased sales (Washington Post) [ The mall? If they can find one with stores … Drudgereport: Malls hit highest vacancy in 11 years... Reality paints a different picture ... You're going to see some very large bankruptcies / foreclosures soon … This is the grim economic reality [ http://albertpeia.com/grimreality.htm . A Trading System That Challenges the Efficient Market Hypothesis [ I haven't included the body of this article because it's not worth your time. What parallel universe is McCurdy operating in? Even in the heyday of that so-called hypothesis, close examination of the data indicated that if you weren't timing the market you were, in a somewhat 'Charlie Sheenish' manner of speaking, duh! … losing! (my MBA Thesis, 1977, NYU GBA, Finance – which required study / mastery of such math intensive theory which wasn't for the faint of heart.) Said 'hypothesis' wasn't true then and certainly isn't true today where complex computer-programming can and does artificially produce the various criteria / buy / sell / signals alluded to in the article (they're widely known / followed) creating the rigged / fraudulent trading game geared to maximized the 'churn-and-earn' commission profits (net negative in economic terms) and enabling the passing of 'those hot potatoes'/paper shares in a manner that resembles a game of musical chairs with those not in the loop winding up holding the bag (including pension funds, etc.); all the while funding those lavish lifesyles / over-compensation of the frauds on wall street along with the direct / indirect bribes inuring them from stigma and as well, insulating them from proper scrutiny and prosecution. Fundamentals, fundamental rational analysis has become virtually irrelevant to these now fraud-prone markets like never before in history facilitating frauds of magnitudes that have made the rationalization 'too big to fail' a byword of pervasively corrupt, defacto bankrupt american failed finance; which frauds continue unabated, unprosecuted even as you read these words. In retrospect, one might say of such theory, in reality, that famed snoopy(ish - the dog) aphorism, 'baffling them with b*** s*** '. The frauds on wall street et als should be criminally prosecuted, jailed, fined, and disgorgement imposed. Dave's Daily 'If you can keep interest rates this low this long, its inevitable cheap financing can allow companies to start cobbling each other up. Further Ben's policies allow companies like IBM to sell bonds at 1% and buy back shares with the proceeds (total paper bubble-scam). POMO is occurring almost daily and Primary Dealers can buy back their shares and pay dividends with what essentially is taxpayer money-- … an especially great opportunity to sell / take profits while you still can since there's much worse to come! ]
Liberals worry Obama has given up ground (Washington Post) [ Worried? Given up ground? Are they kidding? Is this some parallel universe they're operating in? Come on! Wake up! Wobama's done! Finito! He's been and is an abject failure as president; both by what he's done as not promised and not done as promised, viz., perpetual wars and overspending, etc., and no prosecutions of the frauds on wall street, etc., respectively. He is a total failure and an embarrassment to the presidency as was his predecessor. He's totally incompetent with an innate predilection to 'zig when he should zag' … 'wobama the b' (for b*** s***) is pathetic! Quite simply, for wobama, it's too late! … Drudgereport: RASMUSSEN: President hits new low Taxpayers foot $850M bill for Wall St.’s pension fees NY Post | New York City taxpayers are helping to pay $850 million in Wall Street investment fees.
U.S. Deficit to Rise to Largest Among Major Economies, IMF Says The U.S. is set to have the largest budget deficit of major developed economies this year and should narrow it now rather than face tough adjustments in the next two years, the International Monetary Fund said.
Inflation, fueled by gas and food prices, adds to worry
White House warns of debt ‘Armageddon’
Drudgereport: Obama to Call for Higher Taxes...
DEFICIT ROCKETS 16% IN FIRST HALF OF YEAR...
Inflation Actually 'Near 10%'...
IMF: US 'lacks credibility' on debt...
'Stringent Austerity Measures' Needed...
BUDGET TRICKS, SLEIGHTS OF HAND IN BUDGET DEAL...
Conservatives' criticism growing...
Budget deal axes 'czars' -- who are already gone...] The president faces a rebellion on the left, with key groups concerned that he has let the GOP message of reducing government trump that of creating jobs.
GE Not Repaying Tax Refund; AP Duped by Phony Press Release
CIA’s post-9/11 brain drain (Washington Post) [ Wow! Talk about the most positive 'take' (figuratively and literally) on what's become a typical pervasively corrupt, defacto bankrupt american modus operandi in sucking on the bureaucratic teet till dry (yes, drying up at break-speed). The unfortunate incorrect presumption by inference is that brain-drain implies some of value leaving the ranks of the CIA to bring their 'uplifting talents' / value to the ranks of non-government, private sector, etc.. Important as this flow of so-called seasoned personnel may be (I especially liked the Washington Post's exposé on the ubiquity of top-level security clearances in the Washington Metro area), still ultimately a cost borne by taxpayers, I reasonably question their 'value' and the word 'brain' implying intelligent. From Iraq, to more current nation-bankrupting debacles, ie., Afghanistan, etc., to strategies concerning China (the transfers), one may reasonably lump them in the latter category according to that axiom, 'those who can, do' … ‘those who can't, work for the u.s. government or are contractors for the u.s. government’. So, I must say, the drains of so-called brains in the cia are, at the least, grossly exaggerated and I'd say, no loss at all. After all, look at the nation, domestically / internationally, including 9/11.
Pakistan Tells U.S. to Halt Drones 6 year old girl groped then drug tested by TSA You Tube War crime? U.S. Troops Fire on Iraqi Detainees (Video) Aaron Dykes IRS to increase “pre-crime” enforcement Sovereign Man Libya: Increased Airstrikes, Ground Troops, Contractors, Civilians Killed, Deadly DU Munitions – Can We Call This A War Yet? ] Private firms have hired scores of top officers, partly to gain access to intelligence contracting.
Equity Valuations Are Forming the Second Biggest Bubble in U.S. History Kaspar [ Give this man a cigar ... he gets it right! ] Originally Posted on GoldShark.com 'Despite the terrible economic performance of the past ten years (both in terms of the markets and the general economy), equity valuations are now approaching the second largest bubble in United States history, surpassed only by the technology bubble.
Both the cause and the potential ramifications of this development are astounding.
Exhibit one: The cyclically-adjusted price-to-earnings ratio, or CAPE.
This is not a “fad” valuation metric. CAPE dates back to 1871, offering 140 years worth of data, during which time, the mean price-to-earnings ratio is 16.
According to Yale University’s Dr. Robert Shiller, the market is now 41% overvalued according to this valuation metric. The only time the markets have been more overvalued was a few brief months in 1929 and the tech bubble.
[chart http://static.seekingalpha.com/uploads/2011/4/12/saupload_cape_thumb1.png ]
Exhibit 2: The Q ratio, which measures total market value compared to its replacement cost.
The Q-ratio data in the chart below dates back to 1900. According to the data, the markets have now surpassed the 1929 peak valuation by over 8%. In United States History, only the tech bubble was bigger than what we are experiencing today.
[chart http://static.seekingalpha.com/uploads/2011/4/12/saupload_q_ratio_thumb1.png ]
Historically, bubbles turn a believable story and a trend into an overvaluation. In the 1700s during the South Sea Bubble, the mania driving the bubble was the seemingly endless wealth and prosperity of the New World. Railroading prospects induced a bubble in the late 1800s as America became connected from the east coast to the west coast. In the 1920s, a bubble formed on belief in the newly formed League of Nations (world peace), and more importantly, the society-changing impact of the automobile.
A similar life-changing invention – the Internet – swept the attention of investors in the 1990s as the prospect of a virtual marketplace would forever globalize commerce. Every bubble has a story, whether it be tulips or inventions or some other craze.
What is the story today? The prospect of inflation? High unemployment?
Exhibit 3: The gap between projected 12-month earnings against the 10-year average. (Two notes: a. the chart from Bloomberg fails to insert the word ‘projected’; Robert Shiller references this chart in this Bloomberg article. b. the 10-year average is the cyclically adjusted price to earnings ratio).
Considering the power of mean reversion, the market is stretching this reversion greater than 2000 and 2007!
[chart http://static.seekingalpha.com/uploads/2011/4/12/saupload_gap_between_12_month_average_thumb1.png ]
Another question. Could the growth in earnings have been artificially manufactured?
To quote Elizabeth Barrett Browning: “Let me count the ways.”
· The change in accounting rules for the financial sector by FASB has generated massive “false” account profits beginning in 2009.
· The extended (and then further extended) unemployment benefits have kept an artificially higher demand for consumer consumption. As a result, the US government has artificially subsidized corporate profits.
· The billions saved through “free loading” by homeowners who have defaulted on their mortgages yet maintained their residence, thus living without a mortgage payment.
· The artificially suppressed interest rates.
So, not only do we have a valuation bubble, but the earnings on which the projections are based are non-sustaining, and non-market driven. Brilliant. Again, I am left wondering how it is possible to find ourselves in the same overvaluation situation as a few years ago especially considering nothing has been resolved to actually fix the world’s economic system.
A parting thought: according to research conducted by the Duke University Medical Center, it would seem that even monkeys are capable of learning from their mistakes. Why can’t we?'
World financial leaders meet (Washington Post) [ Haven't they done enough damage? The Negative Volatility Regime: The Market's Disconnect From Global Turmoil The Hard Trade ( A very interesting and important read / perspective; but I believe he is far too kind, gentle, empathetic, and overly eager to euphemistically explain the criminal fraud that continues even as I write. Indeed, his explanation may fit for the more 'passive' market participants as they watch these frauds unfold in the face of dire, contraindicated facts and circumstances. Yet he ignores the reality in that we are talking about literally the criminally insane on wall street. Forget not that huge amounts of money, in the trillions, have been scammed through fraudulent means, ignoring reality, and with wink and nod embracing the convenient, glaringly inaposite non-truth. His explanation is analogous to trying posit some rationale to the serial killer as such confronts a new victim. Moreover, I also believe he ignores the role of modern-day technology, viz., complex computer programming in facilitating these frauds, high-frequency churn-and-earn trading (of no economic benefit in net real terms), the ease of which accomplished is too tempting for these predisposed criminals to resist. I truly believe that with the 'profit' / fraudulent gains taken out of the 'equation' through, ie., prosecution, fines, jail, disgorgement, etc., you'd be less likely (though not completely, given the nature of criminal insanity) to see such disconnect from those 'inconvenient truths' others of us know as reality. That said, as elsewhere set forth on this website, the psychological factor is among the factors considered when analyzing securities, others of which include the economy, growth of earnings, quality of earnings, etc.. But, make no mistake, they are greedy, criminally insane, and do it for the money ( in contravention of the rights of others as in, ie., anti-social personality disorder, among other psychological afflictions ). ] ' For months I have been frustrated and surprised by the action of the markets in the face of continued turmoil. In different contexts, I’ve used terms such as "disconnected" or "bifurcated" where there seems to be a total discontinuity between the facts and the market actions... he starts with behavioral finance and defines the normalcy bias:
Normalcy Bias and Crisis: A quirk of the human condition is for the mind to desire normalcy so intensely as to consciously or subconsciously disregard knowledge that is disruptive to a pre-conditioned reality. This phenomenon is an important part of crisis management and market psychology. The consequence of a normalcy bias is that warning signs of a potential crisis go unnoticed or are interpreted optimistically...'
When a crisis occurs people are so overwhelmed by events inconsistent with a desired reality they lose their ability to make decisions. Researchers believe when the mind encounters an entirely new experience or event it attempts to match that reality to relevant experiences from the past. If there are no matching experiences the mind enters into a kind of feedback loop resulting in passivity. This lack of action as a response to risk is called negative panic1 and it culminates in a dangerous inability to act assertively in crisis. In essence, the psyche struggles to come to terms with what is really happening. Paralysis follows. ( Interestingly, I believe this to be a more apt description of the Japanese reaction in this earthquake / tsunami induced nuclear crisis. )
He then goes on to discuss how the normalcy bias can lead investors to ignore looming threats, which in turn can lead to "a cancellation of short-term volatility risk premium that should otherwise exist." This new Negative Volatility Regime is defined by:
1. Large declines in spot volatility: The past nine months have shown an unusually high number of large declines in spot volatility (realized and implied) that are of a much higher magnitude and length than what has been observed historically. As a result of these large declines, the VIX index and short-term realized volatility are below historic averages;
2. Abnormally steep volatility curve: The manifestation of an abnormally steep volatility curve (as a % of spot volatility) with a linear shape that more closely resembles a glacial cliff as opposed to the more traditional desert plateau (see chart);
3. Underperformance of Variance Hedges: Low volatility-of-volatility on the back of the variance term-structure results in the underperformance of out-of-the-money options and variance as a hedge against market declines;
4. High Volatility Skew: High levels of volatility skew for far out-of-the-money options showing increased likelihood of large declines in equity prices.
The article has a detailed discussion and great graphs representing the shape of the volatility structure. The full report can be accessed at: Artemis Q1 2011_Is Volatility Broken. (It is posted with permission.)'
Cottarelli: U.S. needs ‘fiscal adjustment’ (Washington Post) I'd call this an understatement … pervasively corrupt, defacto bankrupt america needs far more than a 'fiscal adjustment' … How 'bout 'complete makeover' ... Gas prices fuel worries about recovery (Washington Post) More money spent at the pump means less to spend elsewhere.
[ If only gas prices were the only reasons for concern regarding the so-called recovery:
Weisenthal On Tuesday April 12, 2011, 1:02 pm EDT
‘Dear investors.You’ve had an amazing run since March 2009.
Maybe it’s time to get a little nervous. In addition to all kinds of dicey headlines — Japan (NYSE:EWJ), the Mideast, etc. –the economic data is starting to add up, and look like a slowdown.
You can see it in business confidence, headline GDP, and certain aspects of employment. Some previously hot industries are clearly starting to fade.
Case Shiller Is Showing The Housing Double Dip Getting Worse
Small Business Confidence Is Suddenly Turning Lower
Image: NFIB
Q1 GDP estimates have been getting slashed
Image: Wikimedia Commons
After starting off at 4%, estimates for GDP are now in some cases below 4%.
Durable goods have been weak Las Vegas gaming revenue has suddenly turned south again.
Image: WilWheaton on flickr
Oil prices have pushed the economy to the breaking point
http://static4.businessinsider.com/image/4da466804bd7c84422020000-547/markets-are-stalling-out.jpg
Markets are stalling out The age of cheap money is going away
With inflation on the rise, basically everything things QE2 is toast.
Austerity warnings from the UK
Image: Twitpic
In London, where fiscal tightening is further along than here, it’s having a clear effect on consumer spending. That’s coming to the US, too.’
U.S. trade deficit narrows in Feb. (Washington Post) [ This is truly hard to believe … maybe they're counting american products made in China with ie., Chinese, etc., components and shipped back here for a name slapped on the package before resale … see Dell, infra ... More Americans work for the government than in manufacturing, farming, fishing, forestry, mining and utilities combined Today in America there are nearly twice as many people working for the government (22.5 million) than in all of manufacturing (11.5 million). ] A drop in U.S. imports from China and elsewhere helped narrow the trade deficit in January.
Yield Curve Appears to Be Flattening. Is Recession on the Way? The Hard Trade 'Slowly and quietly, spreads of the 2-10 year Treasuries decided not to blow out and instead have started coming back. What does it mean that in a world of increasing rates, we’re getting a flattening yield curve?
Here’s the 10 year yield (click to enlarge):
http://static.seekingalpha.com/uploads/2011/3/30/saupload_10yryld.png
Edging up slightly recently, and certainly not contracting. On the flip side, look at the 2-10 spread (click to enlarge):
http://static.seekingalpha.com/uploads/2011/3/30/saupload_2_10_yr.png
A few short months ago, hyper-inflationists were warning that this spread, which hit high after high, would blow out as inflation took hold, became rampant, and we’d be back to the middle ages. I was never in that camp, and while we see some inflationary pressures building, I think the main risk remains deflation as real estate, unemployment, etc. will drag down the consumer.
Regardless, the 2-10 spread has come back from the brink and the curve is now flattening. I don’t know which way we go from here, but my analysis is still that rates are headed higher on an absolute level and the flattening yield curve supports my view that a recession or worse could be on the way. It’s a bad combination to have higher rates, deflation of stores of wealth, and a government with no ability to provide future fiscal and monetary stimulus.'
Evacuees struggle to leave shelters Toshiba proposes to scrap 4 nuke reactors at Fukushima plant [ Am I missing something here … some failed attempt at (Japanese) humor … Wow! … remind me not to buy a Toshiba computer [ I’ve also just eliminated dell and apple’s just not worth it (way over-priced)( I previously eliminated SONY Vaio – In 2000 it was probably more of a windows millennium problem but owing to SONY ‘proprietary’ I wasn’t even able to install new operating system ) And, on top of the viral barrage and typical windows problems, I had some problems with the dell, and when I opened the 'case', though not displayed on the outside, this 'dell' computer as displayed in the inside was 'made in china'. With few exceptions, so were the components. So much for the 'american' company … I think the same to be true of apple, etc.. Then quite some time ago, a compaq (now owned by hp) and more recently a hewlett packard, respectively were eliminated – computers didn’t even work – how pathetic. ]. The only explanation is that the radiation must be eating at their brains. Was this proposal ever in doubt … even necessary? I’m at a loss for words! I really am! ] TOKYO, April 8 (Xinhua) -- Toshiba Corp. submitted a proposal to Tokyo Electric Power Co. (TEPCO) and the Ministry of Economy, Trade and Industry (METI) to decommission four troubled reactors at the Fukushima Daiichi nuclear power plant.
Taxpayers foot $850M bill for Wall St.’s pension fees NY Post
Bernanke: Middle Class Murderer Max Keiser and co-host, Stacy Herbert, report on the murderer of the middle class and how the wealth effect equals the poverty effect.
Sideways Action Boots S&P 500 Below 50 Day Moving Average
Survey: Big Money Managers Preparing For Inflation, Rise In Oil
March Retail Sales Show a Slight Decline in Real Terms
Why is the Federal Reserve giving $220 million in bailout money to two wives of Morgan Stanley bigwigs? Matt Taibbi | America has two national budgets, one official, one unofficial.
Big banks are government-backed: Fed’s Hoenig Reuters | Big banks like BoA and Citigroup should be reclassified as government-sponsored entities and have their activities restricted.
Ken Salazar: GOP has ‘amnesia’ about oil spill Politico | Interior Secretary Ken Salazar said Tuesday that Republicans have a “sense of amnesia” about last year’s Gulf of Mexico spill.
GE Says Report on Returning $3.2 Billion to Treasury a Hoax General Electric Co. (GE) refuted a statement claiming the company would return a “$3.2 billion tax refund” for 2010, following criticism of its tax rates and policies.
Amid global meltdowns, what is the half life of the U.S. government’s fiscal solvency? Thanks to the recent (and laughable) “largest annual spending cut in history” announced by Obama and Boehner, it is now abundantly evident that the U.S. government is headed toward a complete economic meltdown that will make Fukushima look chilly by comparison.
National / World
63 percent of people killed in Iraq war were civilians: report Xinhua | U.S.-led wars in Iraq and Afghanistan have been causing huge civilian casualties.
Busted: TSA lied about promise to not pat-down children Aaron Dykes | TSA has defended the groping of 6 year-old girl, saying it followed policy. Yet in Nov. 2010, TSA vowed no ‘enhanced’ pat-downs for children.
West vs. China: A New Cold War Begins On Libyan Soil Patrick Henningsen | The question as to why US-led NATO forces are determined to engineer a regime change in Libya is now becoming clear.
Parents Threatened by TSA Before 6 Year Old was Groped, Girl then Broke Down in Tears Steve Watson | The parents of a six year old girl who was subjected to an enhanced pat-down at the hands of the TSA appeared confused and disturbed.
United Nations Installs IMF Stooge in Ivory Coast Kurt Nimmo | Globalist control returns to the former French colony.
White House threats on Wayne Madsen must be taken seriously Wayne Madsen Report | A source, connected to the White House, gave a warning stark in its directness: “They want to kill you.”
Roberts: Pentagon budget is the result of corruption Half a century ago, president Dwight Eisenhower issued a warning to the American nation about growing military industrial complexes being a threat to democracy, and now it seems as though Eisenhower’s warning has become reality. US is the modern world’s biggest military spender. Dr. Paul Craig Roberts, a former Reagan administration official and a columnist, shares his opinion on RT.
‘Depleted uranium’s toxic legacy to poison Libya for 40 years’ Military experts are accusing coalition forces in Libya of using depleted uranium in their air strikes. The deadly substance can cause cancer and physical mutations in those who come into close contact with it.
Japan Gov’t says radiation is escaping from containment vessels that are not “totally” destroyed ”Even though some amount of radiation keeps leaking from reactors and their containment vessels, they are not totally destroyed and are functioning,” [Hidehiko Nishiyama, a spokesman for Japan's nuclear agency] said. …
Radioactive Seaweed Detected In Puget Sound Radiation leaked from the Fukushima Daiichi nuclear power complex in Japan has been detected in seaweed in Puget Sound, but researchers say there’s no need for alarm.
Congress once again trying to push unconstitutional internet sales taxes Republican Sen. Michael Enzi of Wyoming first tried it and failed in 2007, and now he and Democrat Sen. Dick Durbin from Illinois are together trying it again.
Brave New World the third most censored book in America Aldous Huxley’s dystopian novel Brave New World placed third in the American Library Association’s (ALA) Top Ten List of the Most Frequently Challenged Books of 2010.
Drudgereport: Tiny Tim (geithner): YOU WILL GIVE ME MORE MONEY
OBAMA CALLS NEW TAXES 'SPENDING REDUCTIONS IN TAX CODE'...
RYAN: 'Dramatically inaccurate,' 'hopelessly inadequate'...
CANTOR: Raising taxes 'is not the answer'...
Obama's Support Among Poor Drops to All-time Low...
Left's angst grows over president's 'shift to center'...
Pentagon Warns Obama Against Deeper Defense Cuts ... (And where is it going to come from ... I've said before, and it's still true today, that we've already had in pervasively corrupt, defacto bankrupt, war crimes nation america a defacto coup d'etat) ...
RISE OF NEW WORLD POWER[WITHOUT USA]...
SHOCK: CBO Says Budget Deal Will Cut Spending by Only $352 Million...
Senate panel slams Goldman in scathing crisis report... (...Goldman clearly misled their clients and they misled Congress … referring this matter to the Justice Department and to the SEC … )
CHICAGOLAND: Blago Calls Out Rahm... ..."If the government has their way, my lawyers cannot ask questions about the last conversation I had less than 10 hours before I was arrested, with my deputy governor, when I told him my chief of staff told me, that Rahm Emanuel said that pending Barack Obama's approval, he agreed to be the go-between between me and [Illinois House Speaker] Mike Madigan [and] I would appoint Madigan's daughter the senator in exchange for passing a public works bill that would put thousands of people to work, healthcare expansion for working families so they can afford the high cost of seeing a doctor, and a written promise -- a guarantee in writing -- not to raise income taxes on the people of Illinois."He held a similar press event about a year ago, just prior to the start of his first trial."I'm here today to issue a challenge," a visibly upset Blagojevich said last April 20. "I challenge Mr. Fitzgerald. Why don't you show up in court tomorrow and explain to everybody. Explain to the whole world. Why you don't want those tapes that you made played in court. I'll be in court tomorrow. I hope you're man enough to be in court too."Blagojevich has kept a low profile in recent months, making the timing of his statement curious. Recall that a little more than a year ago, he went on Bill O'Reilly's Fox program and danced around a question as to whether Obama or Rahm Emanuel had any involvement in the case to sell a U.S. Senate seat. Source: http://www.nbcchicago.com/blogs/ward-room/blagojevich-press-conference-119785689.html?12#ixzz1JSctCUNQ'
Liberals worry Obama has given up ground (Washington Post) [ Worried? Given up ground? Are they kidding? Is this some parallel universe they're operating in? Come on! Wake up! Wobama's done! Finito! He's been and is an abject failure as president; both by what he's done as not promised and not done as promised, viz., perpetual wars and overspending, etc., and no prosecutions of the frauds on wall street, etc., respectively. He is a total failure and an embarrassment to the presidency as was his predecessor. He's totally incompetent with an innate predilection to 'zig when he should zag' … 'wobama the b' (for b*** s***) is pathetic! Quite simply, for wobama, it's too late! … Drudgereport: RASMUSSEN: President hits new low Taxpayers foot $850M bill for Wall St.’s pension fees NY Post | New York City taxpayers are helping to pay $850 million in Wall Street investment fees.
Stiglitz, Soros, Summers try to remake global economy RT | George Soros brought together the economic elite to take apart and remake world finance.
Iceland rejects hostile takeover attempt in national referendum John Stratton | Iceland is the only country where the people have been allowed to have a say in the matter.
U.S. Deficit to Rise to Largest Among Major Economies, IMF Says The U.S. is set to have the largest budget deficit of major developed economies this year and should narrow it now rather than face tough adjustments in the next two years, the International Monetary Fund said.
Inflation, fueled by gas and food prices, adds to worry
White House warns of debt ‘Armageddon’
Drudgereport: Obama to Call for Higher Taxes...
DEFICIT ROCKETS 16% IN FIRST HALF OF YEAR...
Inflation Actually 'Near 10%'...
IMF: US 'lacks credibility' on debt...
'Stringent Austerity Measures' Needed...
BUDGET TRICKS, SLEIGHTS OF HAND IN BUDGET DEAL...
Conservatives' criticism growing...
Budget deal axes 'czars' -- who are already gone...] The president faces a rebellion on the left, with key groups concerned that he has let the GOP message of reducing government trump that of creating jobs.
CIA’s post-9/11 brain drain (Washington Post) [ Wow! Talk about the most positive 'take' (figuratively and literally) on what's become a typical pervasively corrupt, defacto bankrupt american modus operandi in sucking on the bureaucratic teet till dry (yes, drying up at break-speed). The unfortunate incorrect presumption by inference is that brain-drain implies some of value leaving the ranks of the CIA to bring their 'uplifting talents' / value to the ranks of non-government, private sector, etc.. Important as this flow of so-called seasoned personnel may be (I especially liked the Washington Post's expose on the ubiquity of top-level security clearances in the Washington Metro area), still ultimately a cost borne by taxpayers, I reasonably question their 'value' and the word 'brain' implying intelligent. From Iraq, to more current nation-bankrupting debacles, ie., Afghanistan, etc., to strategies concerning China (the transfers), one may reasonably lump them in the latter category according to that axiom, 'those who can, do' … those who can't, work for the u.s. government or are contractors for the u.s. government. So, I must say, the drains of so-called brains in the cia are, at the least, grossly exaggerated and I'd say, no loss at all. After all, look at the nation, domestically / internationally, including 9/11.
Pakistan Tells U.S. to Halt Drones Pakistan has privately demanded the Central Intelligence Agency suspend drone strikes against militants on its territory, one of the U.S.’s most effective weapons against al Qaeda and Taliban leaders, officials said.
6 year old girl groped then drug tested by TSA You Tube | Disturbing video shows the TSA groping a very young girl.
War crime? U.S. Troops Fire on Iraqi Detainees (Video) Aaron Dykes | Shocking video has surfaced from 2005 of U.S. troops firing on captive Iraqi detainees after a riot.
IRS to increase “pre-crime” enforcement Sovereign Man | Did you ever see Minority Report?
Libya: Increased Airstrikes, Ground Troops, Contractors, Civilians Killed, Deadly DU Munitions – Can We Call This A War Yet? The globalist coalition refers to it as ‘kinetic military action’, yet as more civilians are killed in NATO bombings, and with experts adamant that deadly Depleted Uranium weapons are being used by Western forces, the conflict in Libya looks a hell of a lot like the occupations of Afghanistan and Iraq all over again. ] Private firms have hired scores of top officers, partly to gain access to intelligence contracting.
Equity Valuations Are Forming the Second Biggest Bubble in U.S. History Kaspar [ Give this man a cigar ... he gets it right! ] Originally Posted on GoldShark.com 'Despite the terrible economic performance of the past ten years (both in terms of the markets and the general economy), equity valuations are now approaching the second largest bubble in United States history, surpassed only by the technology bubble.
Both the cause and the potential ramifications of this development are astounding.
Exhibit one: The cyclically-adjusted price-to-earnings ratio, or CAPE.
This is not a “fad” valuation metric. CAPE dates back to 1871, offering 140 years worth of data, during which time, the mean price-to-earnings ratio is 16.
According to Yale University’s Dr. Robert Shiller, the market is now 41% overvalued according to this valuation metric. The only time the markets have been more overvalued was a few brief months in 1929 and the tech bubble.
[chart http://static.seekingalpha.com/uploads/2011/4/12/saupload_cape_thumb1.png ]
Exhibit 2: The Q ratio, which measures total market value compared to its replacement cost.
The Q-ratio data in the chart below dates back to 1900. According to the data, the markets have now surpassed the 1929 peak valuation by over 8%. In United States History, only the tech bubble was bigger than what we are experiencing today.
[chart http://static.seekingalpha.com/uploads/2011/4/12/saupload_q_ratio_thumb1.png ]
Historically, bubbles turn a believable story and a trend into an overvaluation. In the 1700s during the South Sea Bubble, the mania driving the bubble was the seemingly endless wealth and prosperity of the New World. Railroading prospects induced a bubble in the late 1800s as America became connected from the east coast to the west coast. In the 1920s, a bubble formed on belief in the newly formed League of Nations (world peace), and more importantly, the society-changing impact of the automobile.
A similar life-changing invention – the Internet – swept the attention of investors in the 1990s as the prospect of a virtual marketplace would forever globalize commerce. Every bubble has a story, whether it be tulips or inventions or some other craze.
What is the story today? The prospect of inflation? High unemployment?
Exhibit 3: The gap between projected 12-month earnings against the 10-year average. (Two notes: a. the chart from Bloomberg fails to insert the word ‘projected’; Robert Shiller references this chart in this Bloomberg article. b. the 10-year average is the cyclically adjusted price to earnings ratio).
Considering the power of mean reversion, the market is stretching this reversion greater than 2000 and 2007!
[chart http://static.seekingalpha.com/uploads/2011/4/12/saupload_gap_between_12_month_average_thumb1.png ]
Another question. Could the growth in earnings have been artificially manufactured?
To quote Elizabeth Barrett Browning: “Let me count the ways.”
· The change in accounting rules for the financial sector by FASB has generated massive “false” account profits beginning in 2009.
· The extended (and then further extended) unemployment benefits have kept an artificially higher demand for consumer consumption. As a result, the US government has artificially subsidized corporate profits.
· The billions saved through “free loading” by homeowners who have defaulted on their mortgages yet maintained their residence, thus living without a mortgage payment.
· The artificially suppressed interest rates.
So, not only do we have a valuation bubble, but the earnings on which the projections are based are non-sustaining, and non-market driven. Brilliant. Again, I am left wondering how it is possible to find ourselves in the same overvaluation situation as a few years ago especially considering nothing has been resolved to actually fix the world’s economic system.
A parting thought: according to research conducted by the Duke University Medical Center, it would seem that even monkeys are capable of learning from their mistakes. Why can’t we?'
World financial leaders meet (Washington Post) [ Haven't they done enough damage? The Negative Volatility Regime: The Market's Disconnect From Global Turmoil The Hard Trade ( A very interesting and important read / perspective; but I believe he is far too kind, gentle, empathetic, and overly eager to euphemistically explain the criminal fraud that continues even as I write. Indeed, his explanation may fit for the more 'passive' market participants as they watch these frauds unfold in the face of dire, contraindicated facts and circumstances. Yet he ignores the reality in that we are talking about literally the criminally insane on wall street. Forget not that huge amounts of money, in the trillions, have been scammed through fraudulent means, ignoring reality, and with wink and nod embracing the convenient, glaringly inaposite non-truth. His explanation is analogous to trying posit some rationale to the serial killer as such confronts a new victim. Moreover, I also believe he ignores the role of modern-day technology, viz., complex computer programming in facilitating these frauds, high-frequency churn-and-earn trading (of no economic benefit in net real terms), the ease of which accomplished is too tempting for these predisposed criminals to resist. I truly believe that with the 'profit' / fraudulent gains taken out of the 'equation' through, ie., prosecution, fines, jail, disgorgement, etc., you'd be less likely (though not completely, given the nature of criminal insanity) to see such disconnect from those 'inconvenient truths' others of us know as reality. That said, as elsewhere set forth on this website, the psychological factor is among the factors considered when analyzing securities, others of which include the economy, growth of earnings, quality of earnings, etc.. But, make no mistake, they are greedy, criminally insane, and do it for the money ( in contravention of the rights of others as in, ie., anti-social personality disorder, among other psychological afflictions ). ] ' For months I have been frustrated and surprised by the action of the markets in the face of continued turmoil. In different contexts, I’ve used terms such as "disconnected" or "bifurcated" where there seems to be a total discontinuity between the facts and the market actions... he starts with behavioral finance and defines the normalcy bias:
Normalcy Bias and Crisis: A quirk of the human condition is for the mind to desire normalcy so intensely as to consciously or subconsciously disregard knowledge that is disruptive to a pre-conditioned reality. This phenomenon is an important part of crisis management and market psychology. The consequence of a normalcy bias is that warning signs of a potential crisis go unnoticed or are interpreted optimistically...'
When a crisis occurs people are so overwhelmed by events inconsistent with a desired reality they lose their ability to make decisions. Researchers believe when the mind encounters an entirely new experience or event it attempts to match that reality to relevant experiences from the past. If there are no matching experiences the mind enters into a kind of feedback loop resulting in passivity. This lack of action as a response to risk is called negative panic1 and it culminates in a dangerous inability to act assertively in crisis. In essence, the psyche struggles to come to terms with what is really happening. Paralysis follows. ( Interestingly, I believe this to be a more apt description of the Japanese reaction in this earthquake / tsunami induced nuclear crisis. )
He then goes on to discuss how the normalcy bias can lead investors to ignore looming threats, which in turn can lead to "a cancellation of short-term volatility risk premium that should otherwise exist." This new Negative Volatility Regime is defined by:
1. Large declines in spot volatility: The past nine months have shown an unusually high number of large declines in spot volatility (realized and implied) that are of a much higher magnitude and length than what has been observed historically. As a result of these large declines, the VIX index and short-term realized volatility are below historic averages;
2. Abnormally steep volatility curve: The manifestation of an abnormally steep volatility curve (as a % of spot volatility) with a linear shape that more closely resembles a glacial cliff as opposed to the more traditional desert plateau (see chart);
3. Underperformance of Variance Hedges: Low volatility-of-volatility on the back of the variance term-structure results in the underperformance of out-of-the-money options and variance as a hedge against market declines;
4. High Volatility Skew: High levels of volatility skew for far out-of-the-money options showing increased likelihood of large declines in equity prices.
The article has a detailed discussion and great graphs representing the shape of the volatility structure. The full report can be accessed at: Artemis Q1 2011_Is Volatility Broken. (It is posted with permission.)'
Cottarelli: U.S. needs ‘fiscal adjustment’ (Washington Post) I'd call this an understatement … pervasively corrupt, defacto bankrupt america needs far more than a 'fiscal adjustment' … How 'bout 'complete makeover' ... Gas prices fuel worries about recovery (Washington Post) More money spent at the pump means less to spend elsewhere.
[ If only gas prices were the only reasons for concern regarding the so-called recovery:
Weisenthal On Tuesday April 12, 2011, 1:02 pm EDT
‘Dear investors.You’ve had an amazing run since March 2009.
Maybe it’s time to get a little nervous. In addition to all kinds of dicey headlines — Japan (NYSE:EWJ), the Mideast, etc. –the economic data is starting to add up, and look like a slowdown.
You can see it in business confidence, headline GDP, and certain aspects of employment. Some previously hot industries are clearly starting to fade.
Case Shiller Is Showing The Housing Double Dip Getting Worse
Small Business Confidence Is Suddenly Turning Lower
Image: NFIB
Q1 GDP estimates have been getting slashed
Image: Wikimedia Commons
After starting off at 4%, estimates for GDP are now in some cases below 4%.
Durable goods have been weak Las Vegas gaming revenue has suddenly turned south again.
Image: WilWheaton on flickr
Oil prices have pushed the economy to the breaking point
http://static4.businessinsider.com/image/4da466804bd7c84422020000-547/markets-are-stalling-out.jpg
Markets are stalling out The age of cheap money is going away
With inflation on the rise, basically everything things QE2 is toast.
Austerity warnings from the UK
Image: Twitpic
In London, where fiscal tightening is further along than here, it’s having a clear effect on consumer spending. That’s coming to the US, too.’
U.S. trade deficit narrows in Feb. (Washington Post) [ This is truly hard to believe … maybe they're counting american products made in China with ie., Chinese, etc., components and shipped back here for a name slapped on the package before resale … see Dell, infra ... More Americans work for the government than in manufacturing, farming, fishing, forestry, mining and utilities combined Today in America there are nearly twice as many people working for the government (22.5 million) than in all of manufacturing (11.5 million). ] A drop in U.S. imports from China and elsewhere helped narrow the trade deficit in January.
Yield Curve Appears to Be Flattening. Is Recession on the Way? The Hard Trade 'Slowly and quietly, spreads of the 2-10 year Treasuries decided not to blow out and instead have started coming back. What does it mean that in a world of increasing rates, we’re getting a flattening yield curve?
Here’s the 10 year yield (click to enlarge):
http://static.seekingalpha.com/uploads/2011/3/30/saupload_10yryld.png
Edging up slightly recently, and certainly not contracting. On the flip side, look at the 2-10 spread (click to enlarge):
http://static.seekingalpha.com/uploads/2011/3/30/saupload_2_10_yr.png
A few short months ago, hyper-inflationists were warning that this spread, which hit high after high, would blow out as inflation took hold, became rampant, and we’d be back to the middle ages. I was never in that camp, and while we see some inflationary pressures building, I think the main risk remains deflation as real estate, unemployment, etc. will drag down the consumer.
Regardless, the 2-10 spread has come back from the brink and the curve is now flattening. I don’t know which way we go from here, but my analysis is still that rates are headed higher on an absolute level and the flattening yield curve supports my view that a recession or worse could be on the way. It’s a bad combination to have higher rates, deflation of stores of wealth, and a government with no ability to provide future fiscal and monetary stimulus.'
Evacuees struggle to leave shelters Toshiba proposes to scrap 4 nuke reactors at Fukushima plant [ Am I missing something here … some failed attempt at (Japanese) humor … Wow! … remind me not to buy a Toshiba computer [ I’ve also just eliminated dell and apple’s just not worth it (way over-priced)( I previously eliminated SONY Vaio – In 2000 it was probably more of a windows millennium problem but owing to SONY ‘proprietary’ I wasn’t even able to install new operating system ) And, on top of the viral barrage and typical windows problems, I had some problems with the dell, and when I opened the 'case', though not displayed on the outside, this 'dell' computer as displayed in the inside was 'made in china'. With few exceptions, so were the components. So much for the 'american' company … I think the same to be true of apple, etc.. Then quite some time ago, a compaq (now owned by hp) and more recently a hewlett packard, respectively were eliminated – computers didn’t even work – how pathetic. ]. The only explanation is that the radiation must be eating at their brains. Was this proposal ever in doubt … even necessary? I’m at a loss for words! I really am! ] TOKYO, April 8 (Xinhua) -- Toshiba Corp. submitted a proposal to Tokyo Electric Power Co. (TEPCO) and the Ministry of Economy, Trade and Industry (METI) to decommission four troubled reactors at the Fukushima Daiichi nuclear power plant.
Taxpayers foot $850M bill for Wall St.’s pension fees NY Post | New York City taxpayers are helping to pay $850 million in Wall Street investment fees.
Equity Valuations Are Forming the Second Biggest Bubble in U.S. History Kaspar [ Give this man a cigar ... he gets it right! ] Originally Posted on GoldShark.com 'Despite the terrible economic performance of the past ten years (both in terms of the markets and the general economy), equity valuations are now approaching the second largest bubble in United States history, surpassed only by the technology bubble.
Both the cause and the potential ramifications of this development are astounding.
Exhibit one: The cyclically-adjusted price-to-earnings ratio, or CAPE.
This is not a “fad” valuation metric. CAPE dates back to 1871, offering 140 years worth of data, during which time, the mean price-to-earnings ratio is 16.
According to Yale University’s Dr. Robert Shiller, the market is now 41% overvalued according to this valuation metric. The only time the markets have been more overvalued was a few brief months in 1929 and the tech bubble.
[chart http://static.seekingalpha.com/uploads/2011/4/12/saupload_cape_thumb1.png ]
Exhibit 2: The Q ratio, which measures total market value compared to its replacement cost.
The Q-ratio data in the chart below dates back to 1900. According to the data, the markets have now surpassed the 1929 peak valuation by over 8%. In United States History, only the tech bubble was bigger than what we are experiencing today.
[chart http://static.seekingalpha.com/uploads/2011/4/12/saupload_q_ratio_thumb1.png ]
Historically, bubbles turn a believable story and a trend into an overvaluation. In the 1700s during the South Sea Bubble, the mania driving the bubble was the seemingly endless wealth and prosperity of the New World. Railroading prospects induced a bubble in the late 1800s as America became connected from the east coast to the west coast. In the 1920s, a bubble formed on belief in the newly formed League of Nations (world peace), and more importantly, the society-changing impact of the automobile.
A similar life-changing invention – the Internet – swept the attention of investors in the 1990s as the prospect of a virtual marketplace would forever globalize commerce. Every bubble has a story, whether it be tulips or inventions or some other craze.
What is the story today? The prospect of inflation? High unemployment?
Exhibit 3: The gap between projected 12-month earnings against the 10-year average. (Two notes: a. the chart from Bloomberg fails to insert the word ‘projected’; Robert Shiller references this chart in this Bloomberg article. b. the 10-year average is the cyclically adjusted price to earnings ratio).
Considering the power of mean reversion, the market is stretching this reversion greater than 2000 and 2007!
[chart http://static.seekingalpha.com/uploads/2011/4/12/saupload_gap_between_12_month_average_thumb1.png ]
Another question. Could the growth in earnings have been artificially manufactured?
To quote Elizabeth Barrett Browning: “Let me count the ways.”
· The change in accounting rules for the financial sector by FASB has generated massive “false” account profits beginning in 2009.
· The extended (and then further extended) unemployment benefits have kept an artificially higher demand for consumer consumption. As a result, the US government has artificially subsidized corporate profits.
· The billions saved through “free loading” by homeowners who have defaulted on their mortgages yet maintained their residence, thus living without a mortgage payment.
· The artificially suppressed interest rates.
So, not only do we have a valuation bubble, but the earnings on which the projections are based are non-sustaining, and non-market driven. Brilliant. Again, I am left wondering how it is possible to find ourselves in the same overvaluation situation as a few years ago especially considering nothing has been resolved to actually fix the world’s economic system.
A parting thought: according to research conducted by the Duke University Medical Center, it would seem that even monkeys are capable of learning from their mistakes. Why can’t we?'
The Negative Volatility Regime: The Market's Disconnect From Global Turmoil The Hard Trade [ A very interesting and important read / perspective; but I believe he is far too kind, gentle, empathetic, and overly eager to euphemistically explain the criminal fraud that continues even as I write. Indeed, his explanation may fit for the more 'passive' market participants as they watch these frauds unfold in the face of dire, contraindicated facts and circumstances. Yet he ignores the reality in that we are talking about literally the criminally insane on wall street. Forget not that huge amounts of money, in the trillions, have been scammed through fraudulent means, ignoring reality, and with wink and nod embracing the convenient, glaringly inaposite non-truth. His explanation is analogous to trying posit some rationale to the serial killer as such confronts a new victim. Moreover, I also believe he ignores the role of modern-day technology, viz., complex computer programming in facilitating these frauds, high-frequency churn-and-earn trading (of no economic benefit in net real terms), the ease of which accomplished is too tempting for these predisposed criminals to resist. I truly believe that with the 'profit' / fraudulent gains taken out of the 'equation' through, ie., prosecution, fines, jail, disgorgement, etc., you'd be less likely (though not completely, given the nature of criminal insanity) to see such disconnect from those 'inconvenient truths' others of us know as reality. That said, as elsewhere set forth on this website, the psychological factor is among the factors considered when analyzing securities, others of which include the economy, growth of earnings, quality of earnings, etc.. But, make no mistake, they are greedy, criminally insane, and do it for the money ( in contravention of the rights of others as in, ie., anti-social personality disorder, among other psychological afflictions ). ] ' For months I have been frustrated and surprised by the action of the markets in the face of continued turmoil. In different contexts, I’ve used terms such as "disconnected" or "bifurcated" where there seems to be a total discontinuity between the facts and the market actions. I now have a new term: The Negative Volatility Regime. In a new report from Artemis Capital, Christopher Cole outlines the current environment by focusing on volatility. After my own heart, he starts with behavioral finance and defines the normalcy bias:
Normalcy Bias and Crisis: A quirk of the human condition is for the mind to desire normalcy so intensely as to consciously or subconsciously disregard knowledge that is disruptive to a pre-conditioned reality. This phenomenon is an important part of crisis management and market psychology. The consequence of a normalcy bias is that warning signs of a potential crisis go unnoticed or are interpreted optimistically. When a crisis occurs people are so overwhelmed by events inconsistent with a desired reality they lose their ability to make decisions. Researchers believe when the mind encounters an entirely new experience or event it attempts to match that reality to relevant experiences from the past. If there are no matching experiences the mind enters into a kind of feedback loop resulting in passivity. This lack of action as a response to risk is called negative panic1 and it culminates in a dangerous inability to act assertively in crisis. In essence, the psyche struggles to come to terms with what is really happening. Paralysis follows. ( Interestingly, I believe this to be a more apt description of the Japanese reaction in this earthquake / tsunami induced nuclear crisis. )
He then goes on to discuss how the normalcy bias can lead investors to ignore looming threats, which in turn can lead to "a cancellation of short-term volatility risk premium that should otherwise exist." This new Negative Volatility Regime is defined by:
1. Large declines in spot volatility: The past nine months have shown an unusually high number of large declines in spot volatility (realized and implied) that are of a much higher magnitude and length than what has been observed historically. As a result of these large declines, the VIX index and short-term realized volatility are below historic averages;
2. Abnormally steep volatility curve: The manifestation of an abnormally steep volatility curve (as a % of spot volatility) with a linear shape that more closely resembles a glacial cliff as opposed to the more traditional desert plateau (see chart);
3. Underperformance of Variance Hedges: Low volatility-of-volatility on the back of the variance term-structure results in the underperformance of out-of-the-money options and variance as a hedge against market declines;
4. High Volatility Skew: High levels of volatility skew for far out-of-the-money options showing increased likelihood of large declines in equity prices.
The article has a detailed discussion and great graphs representing the shape of the volatility structure. The full report can be accessed at: Artemis Q1 2011_Is Volatility Broken. (It is posted with permission.)'
Weisenthal On Tuesday April 12, 2011, 1:02 pm EDT
‘Dear investors.You’ve had an amazing run since March 2009.
Maybe it’s time to get a little nervous. In addition to all kinds of dicey headlines — Japan (NYSE:EWJ), the Mideast, etc. –the economic data is starting to add up, and look like a slowdown.
You can see it in business confidence, headline GDP, and certain aspects of employment. Some previously hot industries are clearly starting to fade.
Case Shiller Is Showing The Housing Double Dip Getting Worse
Small Business Confidence Is Suddenly Turning Lower
Image: NFIB
Q1 GDP estimates have been getting slashed
Image: Wikimedia Commons
After starting off at 4%, estimates for GDP are now in some cases below 4%.
Durable goods have been weak Las Vegas gaming revenue has suddenly turned south again.
Image: WilWheaton on flickr
Oil prices have pushed the economy to the breaking point
http://static4.businessinsider.com/image/4da466804bd7c84422020000-547/markets-are-stalling-out.jpg
Markets are stalling out The age of cheap money is going away
With inflation on the rise, basically everything things QE2 is toast.
Austerity warnings from the UK
Image: Twitpic
In London, where fiscal tightening is further along than here, it’s having a clear effect on consumer spending. That’s coming to the US, too.’
Go to following pages for above links:
http://www.albertpeia.com/currentopics2ndqtr10108.htm
http://www.albertpeia.com
http://www.albertpeia.com/alresume.htm
http://www.albertpeia.com/wallstreetlunacy2ndqtr10108.htm
You may post a comment on my blog on any topic: http://alpeiablog.blogspot.com
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