Since late 2006... in fact since 2004 when the economy never really recovered after 2000. I never "got it". I never understood how we could be optimistic about the economy. With stagnant wages, and increased prices. How anyone could believe that our economy had recovered. Except inflation, with rising inflation it makes it look like earnings are rising.
So.... La De Da.... "Booming Economy", Whatever.
Since 2006, I've expected this market to "Correct" Come to "reality"... But Reality is a Fleeting thing.
Market Crash, I expected it in August, November, Jan, mar... In fact, the most money I've lost has been "Waiting for that Crisis of Confidence, that I expect around every corner". Truth is, at one point Sellers Dry up, and Bulls, and short Covering push it the other way. The paper today is filled with enough Gloom and doom (franny and freddy, Indymac... Peak oil), the last remaining Bull will have called their broker and hit the "Sell button" on monday). I expect the whole bit, down 200 futures, the whole thing....
Fanny Freddie, they are probably going to ZERO, But The systemic risk is more than we can handle. I expect some Lucid, Clear Statement on Monday, That will Sure up confidence that the Systemic Risk is Zero. Regardless of whatever happens, with the Housing Bill, and Fanny. Maybe we will bounce for a day or so. But then we will Wash out. and have a nice little August Rally, Then decline again through October, on Christmas Shopping Woes (short Retail).
Why? because current Earnings will not reflect stock Price. and we will here "not as bad as we thought", Prices will soar to reflect "Current earnings", Then they will get sold off to reflect Future earnings before Q4.
As Paulson, and Uncle Ben have been Prepping the economy for, It's time for the Systemic risk from "Moral Hazard" to be delt with. It's time for Citygroup(C), Merrill(MER), wachovia(WAC), Wamu(wm), if and When they go under, in q4-2008, q1-2009. That is when we will Hit Maximum Pescimisum, That is when the Economic Enima will Be compleate, that will be when the 'Banks bottom'
Saturday, July 12, 2008
Again, with the stupid people
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2 comments:
april '09 - "hundreds of thousands of option ARM mortgages will begin resetting, bringing on a fresh wave of foreclosures "
Still think financials will bottom in q1 '09?
Secular Bear's tend to bottom 1.5 years into them. With the ARM resets, that the discount Window will become closed to Investment banks about the same time(maybe), and that the Treasury and congress are planning to have an ability to deal with "a major financial institution blowing up" about that time.
Huge wallstreet Journal story's about "no longer "too big to Fail""
after a year and a half of everyone's retirement getting cut in half. That should bring every seller into the market.
We will hit Maximum Economic Pessimism, and the market will be at 8K. Q1-Q2 09, I'll Suspect economic Armageddon will be "Priced in" Mid feb, mid march 09 sounds about right.
Also possible that we will get to a major currency crisis at that point.
I do have a theory, that this will be longer and slower than anyone expects... so maybe it will take 2 years to get to that point.
2 years of this should be able to exhaust everyone. But I think that 8k level will be key.
You also have to remember that the ARM's are in CDO's held by the big banks, and other investment institutions. and the Holders will just become insolvent before then, and though more ARMS will reset,
They can't really implode twice. and some of the other holders of that paper, aren't leveraged, and don't affect our Economy as much.
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