Why we aren't looking at a new bull market

It's easy to take a couple months of charts and declare that the future will continue the present trend. That's what the Green Shooters/Recovery crowd is doing.

But when you step back and put things into historical perspective, when you analyze the fundamentals of the economy, then it changes everything. It smooths out all the temporary stimulus created by the federal government that is destined to run out soon.

This chart from David Rosenberg sums things up quite well.

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I should note that the chart above doesn't include everything.
For instance, it fails to mention the conditions in the housing sector.

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Or the conditions in the credit markets.

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Or the conditions of the wage earners of the nation.

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I'm not saying that the Green Shooters/Recovery crowd isn't providing a needed service. People want to here good news when they are scared and depressed.
The Onion gives a great example of this from last May.

Tired of hearing the grim truth about their economic future, Americans demanded that the bald-faced lies resume immediately, particularly whenever politicians feel the need to divulge another terrifying problem with Wall Street, the housing market, or any one of a hundred other ticking time bombs everyone was better off not knowing about.
In addition, citizens are requesting that the phrase, "It will only get worse before it gets better," be permanently replaced with, "Things are going great. Enjoy yourselves."
...
"From now on, just tell me the bullshit I want to hear," Pletcher added. "Tell me my savings are okay, everybody has a job, and we're No. 1 again. Please, just lie to my face."

So you see, when people tell you that the bad times are over and everything will be golden from here on, just remember that the American public demanded it.

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The income inequality graph really sticks out.

And commercial real estate. We keep hearing from the same groups that said the subprime mortgage crisis will be 'contained' that commercial real estate won't be a problem. Oh really, well those same banks that lend to small businesses are also up to their ears in CRE mortgages and CMBS so you think that they will be providing any credit anytime soon if they still exist. And how is that a positive thing for the economy.

Question: Does S&P still publish S&P 500 price to cash flow ratio?

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The Armageddon cliff is over

The Economic Armageddon cliff is over. That's the problem with the green shoots, they won't recognize that by only looking at trends, they are comparing EIs that are really on the sea floor to the Mariana Trench.

Also, before any of this hit, the economy was not good for most as it was, due to strong structural problems. Starting heavily in 2000, we had not only offshore outsourcing of any job not nailed down in tech as an agenda, (this was an agenda, in power point slides, in corporate boardrooms) but we had the China PNTR kick in and that enabled a mass exodus of manufacturing to China, so both of these were a double whammy to the middle class.

But in terms of the current state of things, when one looks at the absolutes and things like your fact sheet above, hey, just like the factory orders report I wrote up yesterday...all the headlines abuzz with how great the report is...

but they fail to notice that when one compares where new orders were before the recession, it's still a long way to go because the Economic Armageddon trough was so deep.

As if 2007 was just a "wunderbar" time?

This is one of the reasons I'm writing all of those EIs up. You really cannot go by the headlines or even the actual report without a little study and it's pretty much a few bloggers who are doing that to show this ain't no boomin' economy happening.

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Yeap cliff diving is over but death by a thousand cuts starts

If we are NOT going correct the economic defects left by neoliberal policies and it doesn't look like we will then we will continue to 'stabilize' at a much lower level with high structural unemployment, more income inequality, and social unrest.

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Rosenberg is on the record

Rosenberg is on the record as a deflationist, yet above he endorses a chart that says inflation is increasing. Rosenberg like Roubini is (was) a one hit wonder. He 'has been' dead wrong on the equity markets for almost a year.

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