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The Bears Den (Bears only!)

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From the most credible Bear in the world; Stephen Roach Chief economist at Morgan Stanley:

http://www.morganstanley.com/GEFdata/digests/20060120-fri.html#anchor0

So far, so good, for an unbalanced world -- the sky has yet to fall. And the longer a lopsided global economy continues to chug along with impunity, the more the broad consensus of opinion becomes convinced that this is a sustainable outcome. This increasingly complacent mindset may be about to meet its toughest challenge: A likely turn in the liquidity cycle appears to be on a collision course with ever-widening global imbalances. This could well be a lethal combination that triggers the long-awaited capitulation of the American consumer -- heretofore the mainstay of a US-centric world...
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Wayne

As he says in his convoluted style is what is going to happen to interest rates and whether they will stangle the US (and Aussie) borrowers.
I get the impression US consumers are where we were two years ago, borrowing on the house rise equity, enjoying lower manufactured goods prices (thanks China).

In my opinion, there will be a crunch but it may still be a long way off.
Reasons inflation may rise include - China revaluing the countries exchange rate upwards, excess money supply. Wage breakouts are not occurring in the US. Europe and the US are struggling to compete further reducing inflation.

The crunch will be big but I don't think it will be this year and probably not next year either.
 
The thing that has me thinking is.....

Such wild swings in the markets as of late.


Granted they havent been that major but big enuff to make me think there are alot of people riding up the bull market with the hand reseting on the eject button.


No doubt the dow will make up most of today's losses next week (as have the asx and nikkie) but when they do truly fall of the perch I think it may be a long fall to bottom.

Think it will be a long climb before that fall too.
 
Dow down, will make nervous Monday.

Also with Australia Day coming, Wednesday can bring some just in case selling and if Thursday no good in US, Friday 27 might be quite a day, if not , not.
 
tech/a said:
Smurf.

Well 20 yrs is as far back as my charts go.Had I had 100 yr charts the I would have used them.

Wayne.

Its about timing and those who are doing this in a flat and possibly falling market are asking for trouble.
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My post wasn't directed at you personally Tech. Just an observation that people using charts in general have a tendency to choose a timeframe which suits whatever it is they are attempting to prove rather than showing both sides of the story.

Bulls tend to show charts which start at a bear market bottom and explain away corrections during the bull market with "it's time in the market, not timing the market which counts". If they showed a chart which started at a bull market top then it would be very obvious that timing does matter.

Agreed strongly with your point that what works in a bull market is asking for trouble in a flat or falling market. TIMING MATTERS! Agreed also about the need for education.

As for bearish things in general, the oil price is up strongly again overnight and US oil stocks have reached a new high so I think oil's going to be an issue. http://finance.yahoo.com/q/bc?s=^XOI&t=6m&l=off&z=m&q=b&c=
 
mit said:
I have been in various forums since 2003 and I think that Tech is refering to the people on these forums who have said that the market has gone too far/the economy unsustainable and they are out of the market and are short. These guys would have missed a lot of profit over the last two and a half years.

Can you call yourself a bear if you trade with the trend and are long but think the economy stinks? The market is driven by emotions and government action the economy doesn't seem to have much to do with it unless the market starts worrying about the economy.

I haven't been able to get XAO data prior to 1980. I did manage to get DOW from 1929 though (from Yahoo). Looking at the data actual down trends are relatively short (12-18 months or so). What tends to happen is that the market goes up for a long time, go down for a short time or is flat. Interestingly as pointed above the DOW is still in a Bear period since 2002.

After last nights action, Monday is going to be interesting (NOT) on the ASX

MIT
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Worrying too much certainly isn't good for your wealth. Trade with the market rather than trying to predict it IMO. If it's bullish then go long, short or stay out if bearish.

Flat periods. If it's going nowhere (and the Dow has gone effectivley nowhere for over 6 years now) then it comes down to dividends or active trading. Do the dividends justify staying invested or would it be better to put your money somewhere else? Commodity stocks, gold and real estate would have made a lot more profit than simply staying in the general market over the past 6 years in the US. Even in Australia they were the star performers. The alternative, of course, is to actively trade since whilst it has been flat overall there have been some big swings in the US market during the past 6 years.

If you look at it in terms of either valuation or real (inflation adjusted) terms the flat periods seem to be bear markets in practice. A bit like typical Sydney house prices over the past couple of years. They haven't moved a lot but if you're highly leveraged or comparing it to alternative investments then you've lost rather a lot with no clear evidence that the losses are over. It would have been better to invest in something which went up rather than something which was broadly flat with a low yield. Easy to say in hindsight of course.

Timing DOES matter despite what the fund managers, real estate agents and others trying to sell something well above long term valuation trends will claim.
 
From My friend at The Money File$

THE FIAT CURRENCY TRAIN WRECK

Posted By: FinancialEdEconomica
Date: Saturday, 21 January 2006, 10:52 a.m.

SUNDAY 15 - SATURDAY 21 JANURAY ECONOMIC SUMMARY

Yesterday gloom on Wall Street as Dow Jones suffered worst day since 2003! Hey but way a minute, (online) newpapers forgot say that When Bush took office in January of 2001, it closed at 10,732.

so, I said to all those who were cheering the DOW 11,000 a while back that profit taking was around the corner....

bear in mind that the DOW has been navigating between the 10 -11,000 benchmarks for more than 5 years now....

what does it mean? ... that the markets have peaked and the only way they can go... IS DOWN... soon panic is going to engluf until the last hopes. Ready for DOW 6000?

(01/20) The looming fiat currency train wreck
......... While the bulk of the Western World's main stream media continues to make pronouncements about the price of both crude oil and gold continuing to rise as a result of Iran's nuclear aspirations - they have completely and utterly ignored the stark, dark reality of the currency train wreck [that is empirically only beginning to unfold] right in front of our eyes...... Imagine, main stream pundits continue to speak of interest rate conundrums without even mentioning the 300+ TRILLION U.S. GORILLA [interest rate derivatives - swaps] sitting on top of the interest rate complex. Why has no one stopped to investigate or explain the cancerous growth [123 Trillion at Q3/03 - now exceeding 300 Trillion [Q3/05] - pg. 47 of 126]? Also, the most recent rise in the price of gold - the main stream media would have us believe it is wholly attributable to increased nuclear tensions with Iran - failing to mention a well documented 16,000ish ton short of physical metal on the part of Western Central Banks?
(SEE LINK BOTTOM PAGE)

AND

The Proposed Iranian Oil Bourse
Krassimir Petrov, Ph. D.
January 17, 2006

Abstract: the proposed Iranian Oil Bourse will accelerate the fall of the American Empire......
http://www.321gold.com/editorials/petrov/petrov011706.html

AND
(01/19) Government Debt Has No Upside
http://mises.org/story/2006

AND

A Short Story About Billions and Trillions By SB Kayser
January 15, 2006
From the rants and observations series.

Our honored Guest and owner of the site named BabylonToday, dropped us a line 2 weeks or so ago to warned us of the following: In the next day or two Treasury will post interest for December 2005. I suspect it could run over 100 billion for Dec. alone, since this is one of two fat months (also June) for interest. ... So we went to the gov site where we read the shocking truth: December $ 92,920,923,827.69

Our pal's estimate was nearly correct. That the amount wasn't over $100bn shouldn't us any sense of a respite, we are dealing with an administration out of control and ready to borrow us into oblivion.

The more frightening is to see the jump over the last 18 years. December 2005 alone represents more or less 40% of the interests paid for the whole year of 1988 and which were: $214,145,028,847.73.

In one month!!

Also worrying is when we compare 92.9bn with $352,350,252,507.90 which is the amount of interest for the entire fiscal year of 2005, or nearly one thrid.

Sadly many americans are number blind when optimism lacks in the articles they read whatsoever: all what matters to them is that the Dow and the consumer conficence index perform well. And since it reached the 11,000 bench mark a few days ago, why bother? Right?! .... MORE
http://real-wealth-society.blogspot.com/2006/01/short-story-about-billions-and.html

http://www.fmnn.com/Analysis/106/3489/2006-01-19.asp?nid=3489&wid=106
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I really don't understand enuff about economics.

In my limited capacity it would seem that america is running itself into the ground at an unstopable rate, not only that but it seems that everyone knows about it.

I can not comprehend how an elected (assumably reasonably intellegent person - in order to be able to run) could knowingly run a country this way.

The way I understand it america is going into debt at a rate that the trend cannot be reversed (without bankruptcy).

Maybee my simple brain is thinking on too basic a level and doesn't understand the complexities of these matters.

Anyway from what I understand of it america owes the world a whole lot and china is starting to own a whole lot of it. - know where my money is going :)


If america (or the government) was to list - would anyone buy stock in the company?
 
I believe that George W Bush will go down as the worst President ever.
Far worse the William Harding.
If war is declared on Iran, I hope we are not stupid enough to get involved.
Iran is the middle east predominant power. Iran may destroy the US if poor policy decisions take place.
Scary stuff.
 
Part of the problem with politicians is what people vote for. They want quick fix, easy answers without sacrifice. It's just not the way to solve problems in the long term.

A logical thing for the US to be doing (amongst others) would be diverting capital away from real estate speculation and wasteful consumer spending towards actual production. But who would vote for a president promising big new factories in every city whilst Americans get used to smaller cars and get back to doing real productive work rather than financial services? Not many.

Even in Australia, it would make a lot of sense to be processing our minerals etc here. And likewise it would make good economic (and environmental and road safety) sense to discourage big gas guzzlers on the roads. Likewise real estate speculation is a non-productive use of capital which fails to create real wealth. But how many Aussies are going to vote for someone promising heavy industry and a petrol tax hike? It would massively boost our wealth if we did, but the latte drinking property developer types will be too worried about a factory or two spoiling the view. Big money tends to get what it wants so not much chance of a serious push to boost Australia's economy over the long term. We just keep increasing foreign debt and selling the farm instead. Just like America with the exception of the government's own budget.

:2twocents
 
The loss of jobs in the UK is gathering pace and I don't expect it will be long before we see this in other western economies, including Oz.

I've come to see this as a possible trigger for trouble in the housing market, rather than increasing interest rates. (though there seems to be growing pressure on rates too)

http://www.sky.com/skynews/article/0,,30400-13498131,00.html

Manufacturing Jobs Go
Updated: 12:29, Tuesday January 24, 2006

Around 25,000 jobs were lost in the manufacturing industry over the past three months, says the CBI's latest survey.

Manufacturers have been struggling to pass on rising costs to customers as customers themselves tighten their economic belts.

Firms hampered by sharp rises in the cost of gas and oil cut staff numbers in a bid to relieve squeezed profit margins, employers' body the CBI said.
Advertisement Advertisement

The total number of jobs lost in the manufacturing sector over the past year was 106,000, the CBI's quarterly industrial trends study revealed.

"Conditions for manufacturers are getting increasingly tough as costs continue their seemingly inexorable rise," said the CBI's Ian McCafferty.

"But weak demand keeps prices down, squeezing already thin profitmargins even further.
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An interesting document:

2nd Annual
Demographia
International Housing
Affordability Survey:
2006
Ratings for All Major Urban Markets
Australia Canada Republic of Ireland
New Zealand United Kingdom United States
(Data for 3rd Quarter 2005)
​

http://www.demographia.com/dhi-ix2005q3.pdf

Excerpt:

Most Unaffordable Markets: The least affordable markets are generally in California, Hawaii, the
US east coast, Australia, the United Kingdom, New Zealand and Vancouver. The most unaffordable
market is Los Angeles & Orange County, with a Median Multiple of 11.2, far above the “severely
unaffordable” threshold of 5.1. The Median Multiple is 8.5 in Sydney, 6.9 in London, 6.6 in
Auckland, 6.6 in Vancouver and 6.0 in Dublin (Table 2).
The most pervasive housing affordability crisis is in Australia, where all markets in metropolitan
areas with more than 1,000,000 have Median Multiples of 6.0 or higher. Affordability is only
marginally better in Ireland, New Zealand and the United Kingdom.
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The most ridiculous Australian city on that list is Hobart in my opinion.

Nothing wrong with the place, I live there after all, but Hobart valuations higher than Melbourne??? That's absolutely ridiculous when you compare the two.

Melbourne : A "real" city with millions of people where land within reasonable distance of the city centre is genuinely scarce.

Hobart : A small city which locals call "town". There's undeveloped land within a modest walk of the GPO and no real reason to live near the city centre anyway from a lifestyle perspective (unless you want to live in a big city for the atmosphere etc in which case Hobart isn't the logical choice...).

As I said, I'm NOT bagging Hobart but it's plainly ridiculous that it is anything other than much LOWER valued than Melbourne. It just doesn't make sense no matter how I look at it. There's just no scarcity factor down here and little chance of that changing in the next few decades at least.

I just can't believe that in a state with saw mills all over the place, a big cement works that exports much of its production and a brick factory within an hour's walk of the Hobart GPO it costs so much to build a house. Just doesn't stack up. Can't blame that old excuse of freight across Bass Strait for this one.

IMO builders will just keep building "on spec" until selling prices and construction costs are back in balance. So either construction costs are set to soar or house prices are coming down or some combination of the two.

I've noticed plenty of empty houses for sale lately which must say something about the state of the market.
 
I can't post a link for this, have to take my word on it.

Paddington in Sydney is upmarket and has 7 or 8 pubs that people come to from the very top end of Suburbs and City. A stop of before and after a game at SCG or Rugby. Biz lunches, deals to be done, etc.

Yet one of the pubs is thinking of closing at 11pm (lisenced to 12) because it's so quiet. Why would that be? I don't know, but something is happening.

Certainly housing affordability (or lack thereof) is part of it. I see a lot of buildings not getting maint anymore as a backlash.

OK WA is powering on, QLD doing well, but just as the US is a world guide, Sydney is an OZ guide to a degree and is looking uncomfortable imho.
 
The connection may appear vague, but reading through this thread, I'm reminded of an oft-quoted aphorism which I can't quite remember but am sure someone will: something along the lines of

"Lies, damned lies, and more statistics"


I know that's not right. Can someone remind me what it is.
Hope the intended reference is not too obscure.

Julia
 
Julia said:
The connection may appear vague, but reading through this thread, I'm reminded of an oft-quoted aphorism which I can't quite remember but am sure someone will: something along the lines of

"Lies, damned lies, and more statistics"


I know that's not right. Can someone remind me what it is.
Hope the intended reference is not too obscure.

Julia
Click to expand...

Close Julia. It's "Lies, damned lies, and statistics"

Which leads me to another apt aphorism; "...but in the end, there you go."

Cheers
 
Hmmm pity that was an american article.

Would not really have the same effect in Aussie but having said that if the market/realestate went into freefall how much super would people really have??????


Long article...short result....don't count on anyone but yourself for retirement.
 

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