Why the Dow is Hitting 10,000 Even When Consumers Can't Buy And Business Cries "Socialism"

reply to post by GreenBicMan


Nah, toyota nor Honda nor Shell is listed on the s&p.... I don't know if they are listed on any index? ... I do know Chevron is listed on the s&p, but is owned by venesualla... I know they wanted toyota to replace gm on the DOW but DOW ended up refusing to allow a non american corp on the index.

Speaking of C (boy I wish I put every penny I had into C back when it was a $1 ... ) they really should reverse split.. way to many shares..

But I think the point is the money that governments around the world used to prop up the economy isn't where it needs to be when they start to pull back. It went straight to the top 5% and not where it needed to go. US! It would have been better to pay of every outstanding student loan for the last 10 years and next 5 to give the new generation a head start. Most are professionals and have well paying jobs yet most have heavy student loans and cannot consume much due to debt obligations. It's this new generation that needs the head start, not corporations that took excessive risks, leveraged themselves out and then went to US for handouts or there will be dire consequences. Well there is still going to be huge problems. When this bubble bursts there won't be anything left to bail them out with.


Countries are just riding the US sinking ship until the last moment and then they will pull the rug out. Without people to buy Treasuries the US is finished and I think this is in the near future. Xmas results and end of year reports will be interesting. I have a feeling will see what real pain feels like in late Jan early Feb 2010. Going to be bad.

reply to post by Rockpuck


Usually the reverse split is like the "Din-Mac" when Jean Claude blasts the last brick down out of 8 to qualify for the Kumate in Bloodsport.

Although, AIG is breaking those trends.

The conversion from preferred to common as well, but I liked C way back when and I still do as far as anything long term is worth anymore these days

reply to post by DEEZNUTZ


There will always be countries putting money into USA Debt. We never miss a payment, and think about this my friend.

Where else do you put $20,000,000,000.00 when you need to store it somewhere? Not where George Jeung did!

Tony Montana (sp?) should have listed to the greedy banker in Scarface, bc if you think about it, going with the safehaven was correct in the long run. Even though as corrupt perhaps as laundering the money lol.

reply to post by grover


This after reading only the first few posts in this thread,...

HOGWASH !!



The picture painted is by far worse than reality.

Yes, there are those that are hurting, I do not diminish that, but by far on average, the article isnt very representative.

It is more fear mongering, yes, it is more hate mongering, yes, it is more republican anti-Obama mongering, yes, and it is heavily biased with tilted data.

It is propaganda, plain and simple, with a hidden agenda.

reply to post by GreenBicMan
You're in a weird position, trying to defend and attack Fed policies at the same time. I believe the Fed and the current incompetent Obama regime (an extension of the prior Regime) is completely wrong and is driven by ulterior motives of rapid centralization of power desired by the strategic powers in exchange for ideologies of the temp powers, and the Regime as a whole is like a pathological liar that is building a big financial stack of lies on a financial foundation of little lies.

The government is propping up the market. That we get. A number of posters have made that point. It's through banks and sugar highs of damaging stimulus programs.

Companies are faking their earnings, both through intentional means and by taking advantage of laws and financial definitions their lobbyists are paid to change. 'Operational Earnings' and 'As Reported Earnings' were at least in the same ballpark until the '90s, where companies started to play shell games with their losses.

Bank valuation is based on securities that are based not on market values, but fake values. Mark to market of asset values are still suspended. Banks can claim whatever they feel like for the values of their mortgages the hold.

None of it is real. We have idiots in charge.

reply to post by Dbriefed


I dont know about all that, but I know we have not used all the stimulus money so far, as most has gone to state aid anyways I believe?

The FED has the power to do as they please silently through their broker- GS and JPM and friends. While I agree to some extent that is odd/wrong, it really makes sense. Let me tell you why.

When you trade with that money, you must make great gains. The FED can still lose as well, even though they have major $$ to prop up anything for a short time - about a few months ago there were a few spikes in the YM and ES Future contracts at EOD.

Now many said this was funds liquidating positions (which I believe) or could have been the PPT. The FED in turn takes this money and pads their pockets with 80% then with the rest I am sure they filter somehow to keep interest rates low on the short term. This is ALL conjecture though, as I have no idea, nor does anyone on this board. If they think they do, they are fooling themselves.

But there has been MANY times where we spike hard at EOD and go down big the following.. so is that the FED losing? Maybe, or who the hell knows.. point is you do not know, and it's really hard to even say or form a realistic hypoth.

The FED and US T act independently (supposedly) of each other, and I don't think Tiny T has the brains to run an intraday trading operation anyways, but I believe the big bank people in the FED do, and I am guessing they are right about 85% of the time at least.

Not to mention where sometimes high volume call action begins in some areas then major price moves follow in equities. It is dirty all over, but it is a "free market" haha.

So I guess where I am getting is, something may not seem "right" to most normal people outside of this knowledge, but it makes sense longerterm IMO bc the results outweigh the "corruption" if you want to think of it in those terms - because of

a)liquidity

b)price discovery

c)opposing market views which actually add balance to the marketplace

In March the Fed very publicly began monetizing US deficits. This historic dilution of the worlds reserve currency sparked a $usd sell-off , and ignited a global market [stimulus] rally......despite deplorable economic/market fundamentals , elevated PE ratios , and 2% divi's.


March $USD
[atsimg]http://files.abovetopsecret.com/images/member/267eb3bbd143.jpg[/atsimg]


March DJIA
[atsimg]http://files.abovetopsecret.com/images/member/e265966194f1.jpg[/atsimg]


Stocks aren't rising in real terms , rather , the $USD is declining. Nominal stock gains are simply a reflection of the decline in $USD purchasing power.

Besides the NY Fed trading desk , who is supporting the rally ? US institutional buyers (banks flush with taxpayer provided capital) , funds looking to preserve wealth against a deteriorating currency (stocks as an inflation play) , garden-variety trend followers , and foreign investors playing the $USD arb-trade.

Most retailers are long gone.

Originally posted by grover


The article goes on to point out that:

The explanation is simple. The great consumer retreat from the market is being offset by government’s advance into the market. Consumer debt is way down from its peak in 2006; government debt is way up. Consumer spending is down, government spending is up. Why have new housing starts begun? Because the Fed is buying up Fannie and Freddie’s paper, and government-owned Fannie and Freddie are now just about the only mortgage games remaining in play.

Why are health care stocks booming? Because the government is about to expand coverage to tens of millions more Americans, and the White House has assured Big Pharma and health insurers that their profits will soar. Why are auto sales up? Because the cash-for-clunkers program has been subsidizing new car sales. Why is the financial sector surging? Because the Fed is keeping interest rates near zero, and the rest of the government is still guaranteeing any bank too big to fail will be bailed out. Why are federal contractors doing so well? Because the stimulus has kicked in.

In other words, the Dow is up despite the biggest consumer retreat from the market since the Great Depression because of the very thing so many executives are complaining about, which is government’s expansion. And regardless of what you call it – Keynesianism, socialism, or just pragmatism – it’s doing wonders for business, especially big business and Wall Street. Consumer spending is falling back to 60 to 65 percent of the economy, as government spending expands to fill the gap.

The problem is, our newly expanded government isn't doing much for average working Americans who continue to lose their jobs and whose belts continue to tighten, and who are getting almost nothing out of the rising Dow because they own few if any shares of stock. Despite the happy Dow and notwithstanding the upbeat corporate earnings, most corporations are still shedding workers and slashing payrolls. And the big banks still aren't lending to Main Street.

Trickle-down economics didn't work when the supply-siders were in charge. And it's not working now, at a time when -- despite all their cries of "socialism" -- big business and Wall Street are more politically potent than ever.

So much for Obama's policies are bad for business and is turning America socialist. In reality capitalism is having a feeding frenzy at our expense...so what else is new?

I can't think of a better example of the fact that the stock market is not a good or fair indicator of the national economy...that it has lost all connection with the you and me aspect of the economy.

The fat cats are getting fatter and you and me have to tighten our belts.



www.a lternet.org
(visit the link for the full news article)

Good article for the most part.

The issue with the economic policies of Obama are not in the short term. Sure it allows many business to turn easy profits. But the govt stimulus is short term, has pushed the private capital out, and has not done much for the average person. In a sense this is Obama's own version of trickle down economics.

Problem of course is the fact that, like a drug addict, businesses are addicted and dependent on govt money now. If the consumer doesn't come back and the average person stays down, when govt money is withdrawn or inflation takes hold, it could get really ugly.

reply to post by johnny2127


Ya know I am what I call a chronic liberal but I also agree with you more often than not...you post thoughtful and intelligent comments that even when I disagree with you I can respect...

See my signature.

Originally posted by OBE1
/e265966194f1.jpg[/atsimg]


Stocks aren't rising in real terms , rather , the $USD is declining. Nominal stock gains are simply a reflection of the decline in $USD purchasing power.

Good point. I haven't thought of that.
So say for example. If XYZ stock has risen 8% year over year then that is due to the USD decline by 8% for the same period. That seems easy enough to confirm.
Thanks

[edit on 26-9-2009 by venividivici]

i often visit the www. wallstreet pit dot com
and various articles cite the bankers/industry leaders ability to 'Leverage'

also the popculture sentiment:

in the following article...which notes:

Consumer Confidence Largest Six-Month Gain in 15 Years
Mark J. Perry|Sep 25, 2009, 6:14 PM|
NEW YORK (Reuters) - U.S. consumer sentiment rose in late September to the highest... Read »

its a complex system of money transfer,. in a legal and agreeable way.

i'd look for a 3-4% near term 'correction', so as to shake the money trees of the less rich stock traders...up to & including the end-of-year tallys for Funds & managed accounts... by spring 10K will have become the new 'foundation' or 'bottom' of an engineered 'end-of-recession' bull market


just too many factors to make anything other than generalizations,
as i see it

Originally posted by grover
reply to post by johnny2127

 

Ya know I am what I call a chronic liberal but I also agree with you more often than not...you post thoughtful and intelligent comments that even when I disagree with you I can respect...

See my signature.

I agree. Being liberal or conservative is about your own ideology, and many times I have found that conservatives and liberals want the same thing, but disagree how to do it. You've always been thoughtful and articulate, even when I don't agree with you.

The issue comes when people have the 'us versus them' mentality to these issues. They view it as their political party versus the other, and root for their 'team' as if it was a sports team. I would call myself conservative, but not Republican. However, with that being said, I was against so much of what Bush did, it shook my faith in that party. What is interesting to me, is that I have many friends that call themselves liberal or democrats and they disappointed in Obama and/or the democrats right now. Seems like most are disappointed in both parties.

If a candidate was for small govt, wanted the govt out of people's private lives, yet there was a mandate to help the less fortunate that can't help themselves, I would vote for them. Regardless of the letter in front of their name.

[edit on 26-9-2009 by johnny2127]

reply to post by venividivici


So I guess if AMZN goes up 15% in one year, the dollar has to fall by 15%?

That is not very correct.

At the same time, I am still not sure why so many are obsessed about a non trending dollar.

When the markets tanked earlier this year, I heard no one saying its all good because the dollar is strong. Which also represents btw why the dollar is considered a safehaven among currencies in time of crisis.

reply to post by OBE1


Heres my prob. with all of that OBE

1) I am not aware of anyone that plays intraday trading strategies that watches $ vs. Index's if they are playing an index or equity contained in an index

2) I do know (my uncle) the only successful fulltime currency trader I have ever heard of (yes, he is a mathmatical genius, it's sickening) and he was ALWAYS very concerned about trading dollar at peak time when having SP500 and DOW at a close glance... this would also signal the same as #1

3)DJIA and SP500 do not shadow the $, more like the other way around IMO, which goes with #1

______________

So I guess I am saying, index's and equities move before dollar, so the dollar falling is a consequence of US MARKETS/EQUITIES/etc. moving higher and the markets gaining are NOT a consequence of a falling dollar..

Hope that makes sense

[edit on 26-9-2009 by GreenBicMan]

Originally posted by venividivici

Originally posted by OBE1
/e265966194f1.jpg[/atsimg]


Stocks aren't rising in real terms , rather , the $USD is declining. Nominal stock gains are simply a reflection of the decline in $USD purchasing power.

Good point. I haven't thought of that.
So say for example. If XYZ stock has risen 8% year over year then that is due to the USD decline by 8% for the same period. That seems easy enough to confirm.
Thanks

[edit on 26-9-2009 by venividivici]

This reasoning is very off base and overly simplistic. The declining dollar will help some companies, while devastating others. Additionally, there is a correlating relationship between stocks and the dollar. The dollar's rise or decline is reflected in the profit or loss of the business. However, most business that are exposed to dollar price fluctuations, by dollar price hedges. So their exposure is numerated exactly. Additionally, companies take corresponding actions in business to offset movements such as these. Example would be: moving some manufacturing from a country whose currency is relatively strong towards the dollar, to a country with weakness or less strength versus the dollar.

Point is, this theory is incorrect, flawed, and overly simplistic.

reply to post by GreenBicMan

Review the historical relationship between currency devaluations and rising stock values. For a stark example , you might start with Zimbabwe.

reply to post by OBE1


That still doesn't come away from my point of the $ following the US Equities and index's. This would signal a result of equities frontrunning $ and not the other way around.

Plus, lets talk about earlier this year in my previous example.

Would you say that the dive in the markets was a result of over-vaulation of the US Dollar?

That doesn't make any sense to me, and we are not Zim.

Originally posted by OBE1
reply to post by GreenBicMan

 

Review the historical relationship between currency devaluations and rising stock values. For a stark example , you might start with Zimbabwe.

Look obviously if the dollar completely collapsed, the US stock market would as well.

But here is simple proof you are wrong. Over the past 80 years the dollar has devalued 95%+. But the stock market is up multiple hundreds of %.

reply to post by GreenBicMan

The last notable dollar rally (round of deleveraging) , began in August 08 , with a severe spike the last week of Sept.....the market tanked Oct 1st.

Yes , the market reacts to currency fluctuations/interest rates.

No , we are not Zimbabwe , but you need to read the link as a means of understanding the mechanism. Either you didn't , or , knee-jerk bias led you astray.

It's worthwhile info....check it out.