Imminent and severe market correction

[dhukka]

No I didn't see that!! Is this the same mocking, smirking and jeering Art Laffer who last year made fun of Peter Schiff at every opportunity? Oh how I wish I had seen that.

Anyhow, just for laughs \/ ROTFLMAO

The one and the same, here it is for your viewing pleasure

Art Laffer flip flops

 

[wayneL]

The one and the same, here it is for your viewing pleasure

Art Laffer flip flops

Damn! Won't play on this 'puter.
******************************

Comment from The Economist

http://www.economist.com/finance/displaystory.cfm?story_id=10553166

 

[dhukka]

Sorry, wrong clip for the Art Laffer flip flop and the Don Luskin admission, although it's good to hear Gary Shilling baiting Bowyer. Here is the Luskin admission. Will have a look for the Art Laffer flip flop.

 

[dhukka]

Can't find a direct link, however if you click on this link; Art Laffer flip flops, then click on the CNBC tab and then page 5. Then click on the story that says 'Bernanke Stimulates Stock Drop' for the Art Laffer flip flop. Also of note is the polyanna Bob Stein's prediction of 3% GDP growth in 1Q08.

 

[chops_a_must]

It's been interesting watching Kudlow & Co recently, maybe we should start a thread about it? Did you see Art Laffer throw in the towel and admit a recession is under way? Also Don Luskin admitted to being totally wrong in telling people to buy all the way down in this latest market retracement/correction insert what you like here. (big of him to admit it though). Recently I think I want a US recession to materialize just to see Kudlow, Jerry Bowyer and Brian Westbury eat a little humble pie.

"There is no recession out there!" - bahahahahaha.

Geez I hope they keep that sound bite on there for the next 2 years. Even the next couple of months would be great.


I expect mess with bond insurers to give us the next leg down, definitely. The credit crunch thus far has only really effected financial and related sectors to a large degree. But this will freeze entire markets themselves down...

Ambac were up on Friday though weren't they? Strangely. I know there are mammoth shorts on it, so following that stock will be fun and games.

 

[sassa]

Thanks to Ken1 at Marketwatch.

Market opens Tuesday with Bank of A-Bomb reporting their AMD's (Assets of Mass Destruction)----expect $5B write off and 80% reduction in revenue.

 

[dhukka]

The financials are having a truly horrible quarter, with the exception of Northern Trust, every major financial company that reported last week missed expectations and those expectations were already low. In one week S&P500 forecast operating earnings have gone from -8.2% to -13.6% for 4Q07. We should also expect to hear some bad news from American Express when it reports this week. However bad financial results are largely expected. Also of huge interest will be Ambac which reports on Tuesday or Wednesday.

But it's not all bad with respect to US earnings. Technology companies including Apple, Microsoft, Sun Microsystems, Texas Instruments and Ebay are all scheduled to report good profit growth for the quarter. More interesting than the numbers will be the company outlooks. If there is any caution in their outlooks or the outlook does not measure up to market expectations (like Intel last week) there could be some carnage.

 

[Bushman]

For example, if you bought $10,000 worth of the S&P500 in 1966, you would have had precisely $10,000 in 1982. adjust for inflation and you lost money.

That would be from the start of the Cold War (ie Vietnam) to it starting to unravel. Hope you are not trying to compare that to today's global climate.

 

[dhukka]

That would be from the start of the Cold War (ie Vietnam) to it starting to unravel. Hope you are not trying to compare that to today's global climate.

I hope you're not trying to say that the cold war, if there actually was one, caused the S&P500 to go nowhere for 16 years.

The comment was in response to kennas observation that the stockmarket has been in a century long bull market. I was merely pointing out, that whilst that is true, it does matter when you enter the market. If you had entered the market in 1966 you would have been waiting more than 16 years to see any return, adjusted for inflation, even longer.

Same if you bought an index of the S&P500 in April 1999, almost 9 years later you would be sitting on a zero return as of today.

 

[dhukka]

Interesting to go back and read posts on this thread. This one was from Kimosabi in May 2007. How wrong has Mr Kohler been?

Interesting read from Alan Kohler

This is the graph that wasn't on the Internet Version of this article. The file size of the scanned version was too big to be readable.

Market offers good history

With the Dow Jones industrial average having passed through 13,000 points for the first time during the week, the pricing of US equities versus bonds is once again at an extreme, as it was in 2000. But not in the way you think.

And if history is any guide, the allordinaries index will also hit 13,000 in a year.

At the peak of the Dow in 2000 the US equity yield was 3.2 per cent (based on a trailing price earnings ratio of 31.3 times) and the US 10-year bond yield was 6.5 per cent. Shares were obviously expensive, bonds were cheap, and so it turned out.

Now the average p/e ratio in the US is 18 times, producing an earnings yield of 5.5 per cent. The 10-year US bond yield has fallen to 4.7 per cent.

Shares are now cheap, despite the dramatic new record on the Dow, and bonds are expensive.

Much the same is true of Australia, although we are better off using comparisons with September 1987 rather than 2000, since our market didn’t really participate in the dotcom bubble, because we didn’t have many dotcoms.

But it’s a similar story. In 1987 the trailing price/earnings ratio of the Australian market was 20.4, which produces an earnings yield of 4.9 per cent. The 10-year bond yield was then 12.5 per cent.

Today the earnings yield is 6.4 per cent and the bond yield 5.9 per cent. The so-called Fed model, which is controversial, says that the two yields should be roughly equal, so while the relationship between them in September 1987 indicated that shares were very expensive (and/or bonds were cheap), the reverse is now true.

As we stand here with the Dow at 13,000 and the all ordinaries at 6141, shares are cheap.

That might seem a strange thing to say after three years of 20-25 per cent capital gains from the Australian sharemarket, and a 10 per cent gain so far this year, and with many otherwise excitable analysts getting strangely sombre.

But today’s graph — prepared by Shane Oliver of AMP Capital Markets — proposes another view via history.

Dr Oliver has matched the two low points of the market in the 1980s and 2000s — August 1982 and March 2003 — which is when the two bull markets began.

It is now equivalent to about December 1986. History never repeats itself exactly of course, but if it did, the Australian index would hit 13,000 next January — before crashing spectacularly. The point is that the sharemarket has not yet had the price/earnings multiple “blow off” that usually marks the end of a bull market.

The 1987 blow off only took the average p/e ratio to 20.4 because inflation was 8.5 per cent and the bond yield was 12.5 per cent — more than double what it is now. But that p/e was double the then 10-year average.

Now the trailing p/e is 18 times, but inflation is 2.7 per cent and the bond yield 5.9 per cent (3.2 per cent real versus 4 per cent real in 1987).

Times change, but in my view people do not. At the end of a long bull market, with abundant cash and rampant optimism, people tend to go nuts. They start extrapolating existing growth forever and price assets accordingly. So far that has not happened: share prices have merely kept pace with earnings as they are now, not what optimistic forecasters think they might be.

I’m starting to get a lot of emails from people predicting imminent doom and gloom — one confidently predicted that the market would crash last Tuesday.

In many ways it is easy for a pundit to predict the end of a bull market because if it doesn’t happen, you just change the date. No one has really lost money believing you — they just might not have made as much.

Predicting that the market will go up takes courage, because if people invest and it crashes, they lose real money and come looking for you with a half-brick. But here goes: the market is going up from here, possibly a lot. If it does, it will end in disaster. If it’s “just” another 25 per cent, that will be fantastic.

Alan Kohler publishes Eureka Report, an investment newsletter financially backed by Carnegie Wylie & Co. The views expressed here are Kohler’s alone.

 

[wayneL]

In the Torygraph today:

(n.b. relates to the crash landing at Heathrow lST WEEK IF ANYONE DIDN'T HEAR ABOUT IT)

 

[sassa]

Futures opening for the DJIA,S & P 500 and Nasdaq for Tuesday(American time) are looking a tad down at this early stage.Respectively,they are 235,29.90 and 39.50.

 

[korrupt_1]

Aussie SPI future is currently 5490's.... holly $#!T!!!!!

Imminent and severe market correction (more like a imminent and severe CRASH!!)

 

[sassa]

Futures for all U.S. and Asian markets are falling appreciably for tomorrow,s opening.

http://www.bloomberg.com/markets/stocks/futures.html

 

[Awesomandy]

Aussie SPI future is currently 5490's.... holly $#!T!!!!!

Imminent and severe market correction (more like a imminent and severe CRASH!!)

Make that 5460. Perhaps it's time to hide under a rock.

 

[sam76]

Has anyone ever won the monthly tipping competition with a negative result??

 

[reece55]

OK everyone, can anyone tell me what is going on tonight....

My target on the ASX 200 was met tonight, I expected to see 5400 again, but not in January. This is simply an incredible decline, another 220 points just this evening..... it's going to be a dark day tomorrow, because we are going to breach those lows established in Aug....... I have never seen so much bloodshed on the markets.....

Anyone have significant news to tell?

Cheers

 

[MS+Tradesim]

Anyone watching the European markets?

As I type:

ATX 3,708.06 190.22 (-4.88%)
BEL-20 3,485.97 209.16 (-5.66%)
CAC 40 4,748.31 344.09 (-6.76%)
DAX 6,873.54 440.63 (-6.02%)
AEX General 425.16 24.92 (-5.54%)
OSE All Share 449.04 24.58 (-5.19%)
MIBTel 25,691.00 1,219.00 (-4.53%)
ISE National-100 90.13 0.39 (-0.43%)
Madrid General 1,470.00 13.94 (-0.94%)
Stockholm General 297.84 12.25 (-3.95%)
Swiss Market 7,318.93 373.05 (-4.85%)
FTSE 100 5,591.90 309.80 (-5.25%)

 

[Uncle Festivus]

OK everyone, can anyone tell me what is going on tonight....

My target on the ASX 200 was met tonight, I expected to see 5400 again, but not in January. This is simply an incredible decline, another 220 points just this evening..... it's going to be a dark day tomorrow, because we are going to breach those lows established in Aug....... I have never seen so much bloodshed on the markets.....

Anyone have significant news to tell?

Cheers

Apparently this one started in France....

http://www.marketwatch.com/news/sto...x?guid={D39EF3A7-0DEB-489A-A56F-3676BCF20B1C}

Stocks in Europe sold off massively on Monday morning, with banks in France pacing a retreat as fears of more write-downs intensified.

 

[ithatheekret]

CAC , FTSE copping it , the DAX has been hammered and the IBEX , strewth which batter got on to that one , it's out of the grounds , new ball stuff .