I have read conflicting news on the economy this week and am confused. First banks declared profits, and refused more federal assistance and even offered to return some dough. Then I read today that one measure of consumer confidence rose by like 1 basis point. The markets staged a rally this week. I read that Seaworld Orlando is hiring like 1000 more people to accommodate the spring break corwd. I read that young people are not changing their spring break plans. On Nouriel’s website I read that we may be headed for an L shaped depression instead of a U-shaped and the US stock market falling by 50% is not impossible. Obama looks confident. What is going on? Was the crisis just a bubble just like the booming economy? Are we always creating bubbles of fortune and doom? Was this just an excuse to make companies leaner by laying off thousands of people? In the process incorporating a liberal agenda? Is the crisis over?
I think the answer likely lies somewhere in between…I don’t believe all the gloom and doomers, we’ve already experienced quite a bit…all the same I don’t think we’re off the hook yet either, more pain is ahead. Reversion to the mean…
http://dshort.com/charts/bears/four-bears-large.gif I like that chart. I think it puts things in perspective well. If we’re facing another depression, we’re probably about halfway there. If it’s just a recession, we may very well have seen the worste. No way to know for sure.
We were bound to get a small rally sooner or later. I’m not covering my shorts just yet.
I covered my shorts because I thought that there was a good chance that I got most of the downturn, and the change of news from “all bad, all the time” to “mixed news” felt like what ought to start happening at the bottom. Not that this is necessarily the bottom, but it’s why I covered my shorts. I didn’t take the cash and go long, though.
CFA_Halifax Wrote: ------------------------------------------------------- > I think the answer likely lies somewhere in > between…I don’t believe all the gloom and > doomers, we’ve already experienced quite a > bit…all the same I don’t think we’re off the > hook yet either, more pain is ahead. Reversion to > the mean… Isn’t that the truth. There is a reasonable assumption that the road to recovery wont be immediate, but we will see economic activity start to turn over in stronger sectors at the initial point and laggers following. One could make an assumption that these numbers do indicate that, but you have to look at the full force of numbers, including the unemployment statistics and the VIX index.
I am continuing to be confused. The markets are up. news is bad. Order for goods up. analysts predict it’s a glitch. Prez portrays a rosy future. Europeans think we are falling in a pit. Home sales are up, mortgage rates down, people have no jobs. Who is buying and why? It feels like we are in the Bermuda Triangle of the economy where all readings from all instruments are no longer correct ( I will copyright this statement because it sounds perfect). Anyone with any clues whatsoever?
the BDI is down. that means that strength in base materials isn’t translating into global trade, which often means that this is an inflation play only and not a recovery. wait for DRYS and DSX to drive the market up in a real rally. my short finger is getting mighty shaky waiting though. already got burnt once going short so far in this rally. the fact that DRYS is lagging the market tells me that 1) people are still incredibly unconfident in companies’ ability to refinance debt and 2) global trade is slow as both of the above factors affect the price of DRYS. and both will have to reverse themselves for a global recovery.