U.S. stock market on verge of collapse?

[Aussiejeff]

From the celebratory rises in markets you'd think they'd actually really solved something.

They have solved absolutely nothing. Which is something, I guess...

Billionaires, place your bets please!

 

[Uncle Festivus]

again

Doh...you again!

Foiled again!

Short again

Humble fact #1 - for every $1 of global GDP created it has taken $4 in debt to do so....
Humble fact #2 - for every $1 of US GDP created it has taken $2.5 in debt to do so....

Giddy up.....

 

[Uncle Festivus]

then you should be short then..

How 'bout we see how we go over 12 months shorting? I could bet $US100, but it would probably be only worth $US1 by then????

Dow = 13400
Dax = 7790
FTSE = 6050

And not forgetting the 'investment' short, the $AU/$US - $1.052

 

[CanOz]

How 'bout we see how we go over 12 months shorting? I could bet $US100, but it would probably be only worth $US1 by then????

Dow = 13400
Dax = 7790
FTSE = 6050

Start another thread for Year End Index Predictions Uncle...

 

[white_goodman]

How 'bout we see how we go over 12 months shorting? I could bet $US100, but it would probably be only worth $US1 by then????

Dow = 13400
Dax = 7790
FTSE = 6050

And not forgetting the 'investment' short, the $AU/$US - $1.052

in financial markets you dont have to make side prop bets,

underlying macro-economics does not equal stock market..

im long and think its essentially a house of cards going forward.. you can be right all the way up this bull market in your assessment of the macro picture..

welcome to amateur hour

 

[white_goodman]

How 'bout we see how we go over 12 months shorting?

get short then...

 

[Uncle Festivus]

get short then...

I've hung mine out, show us yours

 

[white_goodman]

I've hung mine out, show us yours

test your theories/hypothesis in the market, we all can.. itll provide feedback that you seek


otherwise hypothetical forecasts mean little

 

[Uncle Festivus]

test your theories/hypothesis in the market, we all can.. itll provide feedback that you seek


otherwise hypothetical forecasts mean little

I guess it's all hypothetical while ever the CB's are steering?

What I meant was how about some reasoning or data to put forward for the bullish case, and/or where do ppl see the Dow this time next year. Nothing too serious about it, just something to back the bullish sentiment?

 

[white_goodman]

I guess it's all hypothetical while ever the CB's are steering?

What I meant was how about some reasoning or data to put forward for the bullish case, and/or where do ppl see the Dow this time next year. Nothing too serious about it, just something to back the bullish sentiment?

mine is simple... im long because the CB's/govts wont accept another demolition of pensioner and peoples savings/investments... they will pump money into the economy at any sign of weakness..

this unconventional MP is while slushing around extra money and depressing yields/IR's has forced many yield seekers into the stock market. Australia is now starting to see this (look at Telstra and its trajectory) so im longing many dividend stocks, central theme around TLS...

however when yields start to go up as people exit the safe haven of US treasuries (solvency of US budget reasons), all that money that is usually rolled over in short term treasuries, wont be, and will start appearing as inflation in both real estate and stocks globally.

read Cochranes paper 'inflation and debt' 2011

so while I can agree on the structural problems, the economic playbook is reasonably well known to those who read the BIS and CB papers... the real economy may become more disconnected from the stock market...

 

[Uncle Festivus]

Their wishes may come true so keep an eye on bond yields taking off......no free lunch.

Treasury yields were on track for the biggest weekly jump since March as a confluence of fiscal, monetary and economic news worked against investors’ interest in U.S. debt.

The U.S. government reached its $16.4 trillion borrowing limit on Monday, according to the Treasury Department.
Treasury Secretary Timothy Geithner informed congressional leaders in a letter Monday that the government has begun employing "extraordinary measures" to avoid default as it bumps up against the borrowing cap.
Geithner said his agency is beginning a "debt issuance suspension period."

Geithner said in the letter that the government has suspended investments in a pair of government retirement funds, a move commonly employed by the Treasury when it bumps up against its borrowing cap. Federal retirees and employees will be made whole after the limit is raised

"made whole" when they are allowed to continue printing money to pay to live beyond their means...

 

[Uncle Festivus]

Their wishes may come true so keep an eye on bond yields taking off......no free lunch.

Long-term Treasurys, considered among the safest assets in the investment world, lost 3.07% of value in the early days of 2013””more than wiping away their annual 3% yield in one week.

The dynamic underscores what BlackRock calls "the danger in safety" and highlights the perils of buying even the best-rated investments in an era of rock-bottom rates.

"The first couple of days of the year have been a warning sign for interest rates," said Tim Gramatovich, co-manager of the AdvisorShares Peritus High Yield exchange-traded fund.

 

[CanOz]

Long-term Treasurys, considered among the safest assets in the investment world, lost 3.07% of value in the early days of 2013””more than wiping away their annual 3% yield in one week.

The dynamic underscores what BlackRock calls "the danger in safety" and highlights the perils of buying even the best-rated investments in an era of rock-bottom rates.

"The first couple of days of the year have been a warning sign for interest rates," said Tim Gramatovich, co-manager of the AdvisorShares Peritus High Yield exchange-traded fund.

Market manipulation on the highest order...forcing money into the equity market.

 

[tinhat]

Market manipulation on the highest order...forcing money into the equity market.

Whether your observation is correct or not, there is no doubt that buying bonds with an effective negative real return is a risky business. They are only risk free if you are prepared to hold until maturity (knowing that the real value is diminishing exponentially along the way). No sane person could not expect interest rates to rise at some point. Furthermore, at some point a more sensible re-rating of risk/return was going to have to be taken by the share market making bond prices quite exposed to downside risk. Add in the substantial upside risk to inflation over the medium term...

In short, if prices of bonds have been pulled into a bubble by excess demand such that the real rate of return is negative, surely at some point you would expect bond prices to fall?

 

[CanOz]

surely at some point you would expect bond prices to fall?

Absolutely....but to do that yields MUST rise and there is a snowflakes hope in he** of that happening.

CanOz

 

[white_goodman]

 

[Uncle Festivus]

Absolutely....but to do that yields MUST rise and there is a snowflakes hope in he** of that happening.

CanOz

They won't have to rise that much to make an impact though because of the compounding debt? (Warren Buffett must have forgotten about that one?)

At some stage the faith in USD's will be tested, possibly over the next few weeks with the debt ceiling & resultant credit rating cut when they raise it again?

Some perspective and deviation from the mean......



Althouugh from the extreme bull chart any serious 'profit taking' or correction in equites will slosh back into bonds - rinse repeat.......until someone neutralises all those freshly printed dollars ie someone is eventually going to take a big hit from being overleveraged with Fed liquidity........JPM was just a test?

 

[Uncle Festivus]

Classic.......

The Rising Wedge is a bearish pattern that begins wide at the bottom and contracts as prices move higher and the trading range narrows. In contrast to symmetrical triangles, which have no definitive slope and no bullish or bearish bias, rising wedges definitely slope up and have a bearish bias.

 

[CanOz]

Keep calling it Uncle, sooner or later you've got to be correct!

CanOz

 

[boofis]

I can tell you the buyers that just took out my stop loss on both the 30 yr and 10 yr ( I was short lol! ) weren't very bearish at all haha.