Is this a liquidity bull market?

Discussion in 'Economics' started by noob_trad3r, Sep 28, 2009.

  1. The markets seem to be reaching levels that the recession is over and it will be a sharp increase in GDP etc..

    But with unemployment high, consumers still in debt is this bull market more of a get out of dollars and into stocks before inflation erodes purchasing power?

    It has to be because all these companies are doing multibillion dollar mergers when not too long ago they were not able to roll over commercial paper to make payroll..
  2. Yes. The GE rally is sending the message.
  3. rwk


    There are two possibilities. We may have reached a new permanent plateau of prosperity (ppp), in which case: Why don't all those unemployed people become day traders? It's free money! The other possibility is that we're back in a bubble. . .
  4. Bob111


    REITs are bubble indeed. 200-250% up from lows
  5. Xerox got downgraded to negative credit watch.

    They almost collapsed not too long ago because the the freezup in debt trading and now they take on 2 billion more debt today.

  6. concur, Xerox had accounting problem before, maybe the deal is going to fall apart. LOL:D
  7. Must suck for shareholders, they have no voice in the matter. They just wake up monday to see a 19% drop in the stock and a credit downgrade.
  8. mhparker


    Of note: (a) today's rally is on light volume; (b) long term treasuries have now reached a 4-month high.
  9. It will be interesting to see if the equity market or treasury bonds "have it right". I understand the common notion is US treasury bonds are distorted by Fed QE and Chinese buying. I would argue however that if indeed we were in for a sustainable 4%-5% GDP era bonds would react swiftly (yields would skyrocket), no matter how much Bernanke or the Chinese were buying.

    We'll see soon enough.
  10. There is no way the US will generate a 4-5% GDP.

    Consumers are tapped out and cannot leverage further. Not only that but consumers are fearing jobloss.

    Remember 70% of our GDP is consumers borrowing money to buy foreign goods and services and the US exporting debt.

    What you are seeing is the effects of so many dollar bills sitting in bank vaults with no place to go but into equities since they are running out of space to store dollars.

    Even twitter is now worth 1 billion dollars. Proof that the USD is going to shit.
    #10     Sep 28, 2009