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Dec 6th, 2017
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Joined: Aug 2008
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The financial trampoline act continues...
Dow Close: 8,047.93 +495.64 (6.56%) NPR is saying the big surge is due to the naming of Tim Geithner as Secretary of the Treasury... And if you believe that.... you'll believe just about anything. -
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- Dramatic downturn seen for economic dataWASHINGTON (MarketWatch) -- The economic data this week is expected to take a dramatic turn for the worse, with weak durable-goods sales, consumer spending, and housing data, analysts said.
"I really can't see anything to hope for out of this set of numbers that might be construed as being positive," said Nigel Gault, chief U.S. economist at HIS Global Insight.
There is a clear sense among economists that things are getting worse and the recession will last longer.
"The economy has suffered a heart attack. It needs careful attention," said Mohamed El-Erian, co-chief executive officer of Pimco.
Economists at Goldman Sachs and other top firms are steadily revising down their growth forecasts and hiking their unemployment expectations.
"Things are deteriorating all the time," Gault said.
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NPR is saying the big surge is due to the naming of Tim Geithner as Secretary of the Treasury... And if you believe that.... you'll believe just about anything. Obama hasn't even been sworn in yet, and already the Wall Street cheerleaders are celebrating his first great triumph. According the pundits, the stock market staged a surprise 494 point rally on Friday because--get this--it was announced that Timothy Geithner would be appointed Obama's Treasury Secretary.
Timothy who?
What nonsense. The sudden turn-around in stocks had a lot more to do with short-covering than anything else, but don't let that get in the way of a good story. Even so, the last minute surge on the NYSE couldn't stop another week-long bloodbath that ended with the Dow and S&P 500 tumbling another 5 percent. That's not to say that Geithner is not bright and talented guy. He is; and so is his White House counterpart, Lawrence Summers. But the media hype is way overdone. Geithner doesn't drive the markets and he isn't "change you can believe in". In fact, he's a protege of Henry Kissinger, a member of the Council on Foreign Relations, and has the same political pedigree as his predecessor, Henry Paulson. They're both part of the ruling fraternity and their views of the world are nearly identical. There's no doubt that Geithner will be more competent and effective than Paulson but, then again, who wouldn't be? Paulson may be the biggest flop at Treasury since Andrew Mellon steered the country onto the reef during the Great Depression.
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Moderator Carpal Tunnel
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Sorry, numan, but your source has a flaw in its analysis. If that were an accurate assessment, there would have been a countervailing subsequent loss, and that didn't happen. It may be speculation, but the timing of the market rise is more consistent with NPR's analysis than the Chimpshot.
A well reasoned argument is like a diamond: impervious to corruption and crystal clear - and infinitely rarer.
Here, as elsewhere, people are outraged at what feels like a rigged game -- an economy that won't respond, a democracy that won't listen, and a financial sector that holds all the cards. - Robert Reich
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Joined: Sep 2011
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Moderator Carpal Tunnel
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Moderator Carpal Tunnel
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I have probably mentioned it, but the market is currently trading about where it ought to be, without the ridiculous speculation that has been driving it. It may go down farther, but there are adults in the room, for a change. I don't know how much good they can do - the entrenched interests are mucho resistant - but at least there is a countervailing force, which hasn't existed for at least 8 years.
A well reasoned argument is like a diamond: impervious to corruption and crystal clear - and infinitely rarer.
Here, as elsewhere, people are outraged at what feels like a rigged game -- an economy that won't respond, a democracy that won't listen, and a financial sector that holds all the cards. - Robert Reich
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Joined: Dec 2005
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Pooh-Bah
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I am just curious if a total economic collapse is comming.
And, if so, what will be the timing of the event...
or, will it be similar to the end is near prognostications?
"It's not a lie if you believe it." -- George Costanza
The whole problem with the world is that fools and fanatics are always so certain of themselves. --Bertrand Russel
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Joined: Feb 2006
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Pooh-Bah
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the market is currently trading about where it ought to be I don't think that is true. Look at the dividend yield of some of the strongest companies these days. For example, Bank of America is paying around 8.6% in dividends. They said they didn't need any bailout money, thank you very much, but were asked to take it anyway just so the other guys wouldn't be embarassed! Now why would the value of their stock be "fairly priced" with that kind of income generation? Especially considering they just bought Wachovia, their future income stream will be even higher than when they were just paying a dividend yield about 1/3 of that a year ago! Or how about Apollo Investment: A couple of months ago their price was around $16/share and they were paying $2.08/share in dividends per year. (They are one of those tax-exempt investment companies that has to pay at least 90% of their income in dividends.) Yesterday their stock price slipped under $6/share, but their next dividend payment scheduled for December is unchanged at $0.52/share. (They have no exposure to sub-prime home loans, and there is no information out there that suggests their income stream will decline.) This represents a yield of over 34% per year! Obviously, the stocks of many strong companies are being valued as if they have no future value at all. When Bank of America stock reaches a price yielding under 3% and Apollo reaches a price yielding under 13%, then I will agree that the market is fairly priced. For now, prices reflect total panic.
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Carpal Tunnel
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Carpal Tunnel
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I tend to agree with the Smirking Chimp's assessment of the Geithner appointment. I don't see why the failure of the market to stage a "countervailing subsequent loss" proves any more about the appointment than the initial surge. I think we all recognize that the fate of the financial markets is tied more to "trust" and "confidence" than to any tangible factors, and given that, it seems to me, if the media had hyped Mr. Geithner in the manner that the Chimp did - pointing out that he is cut from exactly the same cloth as Mr. Paulson and that his economic views, and actions, have historically been very similar - it could well have thrown a blanket over the rally.
My conclusion is that whatever Geithner is or isn't, it's the perception of the significance of his appointment that makes the difference.
In the same vein, I see the media fawning over Mr. Obama, treating him as if he were already President, creating an image of him that is much larger than the President-elect is typically afforded. It is this image of the oncoming economic Savior that is essential to instill in the public enough confidence to go out and spend money for the holidays, that will ultimately lay a steadying hand on the teetering economy, not any specific appointment he may make or action he may suggest.
Steve Give us the wisdom to teach our children to love,
to respect and be kind to one another,
so that we may grow with peace in mind.
(Native American prayer)
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Joined: Sep 2011
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Moderator Carpal Tunnel
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Moderator Carpal Tunnel
Joined: Sep 2011
Posts: 18,003 Likes: 191 |
the market is currently trading about where it ought to be Obviously, the stocks of many strong companies are being valued as if they have no future value at all. When Bank of America stock reaches a price yielding under 3% and Apollo reaches a price yielding under 13%, then I will agree that the market is fairly priced. For now, prices reflect total panic. We're mixing metaphors, my friend. I was talking "aggregate" market. With regard to individual stocks, I agree. I think that in the relatively near future, volatility will settle some, as individual stocks begin to be valued more closely to their underlying fundamentals. I was just trying to say the 16,000 Dow was 100%+ over where share prices should have been. When the Dow is 4 times the annual GDP of the US, something is wrong with the numbers.
A well reasoned argument is like a diamond: impervious to corruption and crystal clear - and infinitely rarer.
Here, as elsewhere, people are outraged at what feels like a rigged game -- an economy that won't respond, a democracy that won't listen, and a financial sector that holds all the cards. - Robert Reich
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Joined: Sep 2011
Posts: 18,003 Likes: 191
Moderator Carpal Tunnel
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Moderator Carpal Tunnel
Joined: Sep 2011
Posts: 18,003 Likes: 191 |
I'm not sure, Steve, that we fundamentally disagree. Your conclusions are actually closer to mine than to the Chimp article. It was actually arguing that there was no impact on the market from the appointment, which I think is not borne out by the market affect. I agree that perceptions do matter, and the perception is that the adults are coming to play. The market is responding to that. I also think that the descriptions of the players are deliberately misleading, but that is the point of the smirking chimp: smirking. I just don't like sloppy analysis, and that is my perception of the article.
A well reasoned argument is like a diamond: impervious to corruption and crystal clear - and infinitely rarer.
Here, as elsewhere, people are outraged at what feels like a rigged game -- an economy that won't respond, a democracy that won't listen, and a financial sector that holds all the cards. - Robert Reich
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