Which is precisely why I see huge upside potential still. The US economy is just starting to get legs again. There is a pile of cash sitting on the sidelines with very frustrated people who aren't making any money on their "safe" investments. In the meantime, FED rates area at an all time low, and the FED will do anything they can to ensure the USA booms and Europe's ( their primary export partner) head stays just above water. I don't care how ugly the world economy may appear, stock markets are going up, and up a lot more.
The fly in the ointment has been, and will continue to be, consumer prices and the inflationary side effect of constantly pumping the "risk on" trade. I swear that the price of a gallon of gas incites the populus more than anything these days. Political disapproval oscillates around these consumer prices and since the majority of the population is asset poor, gunning stocks higher in 2012 is not the same as it was in 1999.
However, that's not what the numbers are showing. The data shows that inflation is actually very moderate. Can that be sustained? Hard to know.
Depends upon the data that you are using doesn't it? I've compiled alternative lists of prices Joe Consumer faces in the real world to combat the massaged numbers that are released by the bureaucrats. I'll refrain from any debate on inflation as I spent quite awhile on this topic with the likes of Martinghoul, Kassz, Olias and others last year when I was told the "data shows minimal inflation".
Which takes me back to my original comment about psychology. If you can get enough people believing your story, however ludicrous the story may be, the story must be true. As traders, there is lot more money to made trading what people believe then trading what should be true. Not that I claim to be an expert at this; I'm still learning.
The US economy seems to be pushing forward because of all the stimulus put forth into the economy, anyone who thinks the economy is pushing forward on its own is just a fool. BUBBLE ben bernanke is making it clear that rates are going to stay at 0% for the next 2 YEARS!!!! 2 Years and not only that, but they are planning another round of QE...yippppyyyy more stimulus for the worthless economy. Thats why stocks are going higher.....if the economy didnt see any of these trillions in stimulus you would have a GDP of under 0% and probably a stock market 50% lower, its basically just smoke and mirrors and nothing more. Show me an economy that can grow on its own without the use of QE, historical low interest rates and trillions in stimulus and then maybe I will believe the economy is for real, until then its all being propped up. Another thing you have to take notice is that this economy only grows when there are asset bubbles, and if you take notice over the last 2 decades or so the only time the US has experienced any growth is during these times, so lets look back. Dot com bubble Credit bubble Housing bubble Commodity bubble Private equity bubble Emerging markets bubble Higher Education bubble The list goes, right now BUBBLE ben bernanke is creating a giant global Ponzi scheme, its a false recovery and it will show in the years to come. BUBBLE ben bernanke is creating the illusion of a recovery by pumping the stock market higher, wait until inflation starts to run rampant and its too late to reverse the damages already set. You cannot fight a financial crisis with more worthless dollars and debt, its as simple as that. Would be nice to let the free markets do what they are suppose to do, but of course that could never happen. BUBBLE ben bernanke can only keep the Ponzi scheme going on for so long until the cards fall once again, as they always do.
You mean the JV Team for the Fed/TBTF Banks/BLS brass? Ok, Martinghoul claims she isn't, and she's the smartest of the bunch. I'll take her word. But the way they defend the Fed and gov't numbers, it makes you wonder. Having worked with gov't data in the military, I can tell you massaging, manipulation and WAGs (wild ass guesses) are very common. As for rally-with-no-end-in-sight...well, I don't think this will end well. But I've been in stocks since last Fall, and will continue to until the momentum shifts. No since fighting it. PMs are the only thing I'll take a long-term fundamental or "macro" bet on (i.e., buying even in sharp corrections). Go with the flow on everything else.
Oct 4, 2011 108.35 112.58 107.43 112.34 459,177,500 111.63 No one knew that would be the low set just 4 months ago, fast forward and the SPX is now up 25%+ from that low, that is an incredible rally....funny thing is that even if this market corrected 2% for the week you would have every bull on cnbc crying how unfair the 2% drop was. This is a very unhealthy market, of course about 99% of the people would disagree with that...I guess they dont seem to notice BUBBLE ben bernanke pumping it up.
Fair enough, but you're a trader, aren't you? So why do you care? Go long on the stimulus, and go short when the stimulus is pulled. At some point they will need to raise rates, and there will be a point when everything comes crashing down again. However, betting against BUBBLE ben at this stage is a losing bet.