Show-me Account Talk

[Show-me]

Morning Nordic,

Yes, I see a bubble in equities that I can not participate in fully.

We are not really growing or recovering economical but yet the equities continue higher. Why?

I say the declining dollar argument makes the most sense. A weak dollar is allowing foreign investors to buy American companies on the cheap due to dollar exchange. That in turn drive share prices artificially higher because the more you buy the higher the market goes.

Problem is that the P/E ratios are horrible. Price is to high for earning.

The market is higher on the fact all that money wants some place to go to make money.

In normal times it would go into banks for interest so that banks could lend the money out. Now the Central Banks have all lowered interest rates to near zero eliminating that market for investors. Our own Fed is buying Treasuries to keep the yields down. To much manipulation on paper!

Foreign investors are long shot betting on the U.S. because we are like a penny stock due to the weak dollar. They will cherry pick our best companies out of American ownership and cut them up and move them away. It will ruin the US.

The bubble is forming, but the question is when will it pop?

 

[Show-me]

Be careful and ask yourself what is the risk to reward ratio right now?

 

[Gumby]

Morning Nordic,

Yes, I see a bubble in equities that I can not participate in fully.

We are not really growing or recovering economical but yet the equities continue higher. Why?

I say the declining dollar argument makes the most sense. A weak dollar is allowing foreign investors to buy American companies on the cheap due to dollar exchange. That in turn drive share prices artificially higher because the more you buy the higher the market goes.

Problem is that the P/E ratios are horrible. Price is to high for earning.

The market is higher on the fact all that money wants some place to go to make money.

In normal times it would go into banks for interest so that banks could lend the money out. Now the Central Banks have all lowered interest rates to near zero eliminating that market for investors. Our own Fed is buying Treasuries to keep the yields down. To much manipulation on paper!

Foreign investors are long shot betting on the U.S. because we are like a penny stock due to the weak dollar. They will cherry pick our best companies out of American ownership and cut them up and move them away. It will ruin the US.

The bubble is forming, but the question is when will it pop?

Show-me,

You are spot on in your assessment of the situation. The bubble is indeed growing at an exponential rate.

 

[grandma]

I've heard rumor that starting in 2011 you give them your entire paycheck every payday and they do everything for you. (Mortgage, groceries, car, insurance etc.)

My question was going to be: Who will identify the `them' and the `they' for us? :laugh:

Didn't they try that in the former Soviet Union?

...but mentioning the Soviet Union pretty much clarifies who are in the position to do so....

 

[Birchtree]

What bubble - I don't see any bubble. This recession has been an anomaly because productivity actually rose (9.5%) - that implies companies cut costs dramatically, and if demand picks up it would suggest corporate profits could explode and P/Es will drop, maybe that's what the rally has been all about.

 

[Gumby]

What bubble - I don't see any bubble. This recession has been an anomaly because productivity actually rose (9.5%) - that implies companies cut costs dramatically, and if demand picks up it would suggest corporate profits could explode and P/Es will drop, maybe that's what the rally has been all about.

Where is the demand going to come from with official unemployment at 10.2% and the consumer extending to the max? The household "value" cannot currently be used like an ATM anymore.
This rally has been all about government manipulation.

 

[Birchtree]

The demand will come from those 90% that remain employed - that's why the preliminary GDP will be revised upward. Watch the initial jobless claims numbers drop on Thursday.

 

[WorkFE]

Actually this Rally has been about companies values returning to some type of normalcy with no doubt some assistance from government. 2 years ago alot of stock was extremely overvalued but 8 months ago they were just as much undervalued. JMO

 

[Mcqlives]

Morning Nordic,

Yes, I see a bubble in equities that I can not participate in fully.

We are not really growing or recovering economical but yet the equities continue higher. Why?

I say the declining dollar argument makes the most sense. A weak dollar is allowing foreign investors to buy American companies on the cheap due to dollar exchange. That in turn drive share prices artificially higher because the more you buy the higher the market goes.

Problem is that the P/E ratios are horrible. Price is to high for earning.

The market is higher on the fact all that money wants some place to go to make money.

In normal times it would go into banks for interest so that banks could lend the money out. Now the Central Banks have all lowered interest rates to near zero eliminating that market for investors. Our own Fed is buying Treasuries to keep the yields down. To much manipulation on paper!

Foreign investors are long shot betting on the U.S. because we are like a penny stock due to the weak dollar. They will cherry pick our best companies out of American ownership and cut them up and move them away. It will ruin the US.

The bubble is forming, but the question is when will it pop?

Show-me ,

I agree that there is a bubble being formed but I am not certain that the source is our economy/government/investors. The bubble is coming on a much larger scale than our dollar alone can support. So investors have to look at the IMF for starters and then look at how much of the S&P (and the next 4500 for example) are partially owned by foreign companies. The bubble can't pop with-out hurting the global economy...so who is going to pull the proverbial pin out to start popping?

This is why I have been following the VIX as much as I have. When the VIX dropped to under 23 I should have followed my own advice and bailed...I would have saved 5%. Now that the VIX is back up, and probably heading higher, it means the money is moving. With the majority of the global money on the side lines it is a fair bet, for short to intermediate term, to be all in when the volatility is up.

I know most people dont look to the VIX as a reliable indicator on market direction, and I agree. But something has to push the market out of any stagnation that we may face and I look for increased volatility to be a sign of this. It is a roll of the dice that the direction will be up.

Finally, my thanks and full respect to all of those who are vets, and those who are the loving support (like my wife and family) of vets. Happy Armistice Day!!!

-mcq

 

[Show-me]

cnn - unemployment and zombie flu apocalypse

Great video!!


http://www.youtube.com/watch?v=t04f0_I2t6Y&feature=player_embedded

 

[Show-me]

The FDIC Anesthesia Is Wearing Off
by Robert Prechter

The following article is an excerpt from Robert Prechter's Elliott Wave Theorist. For more information from Robert Prechter on bank safety, download his free report, Discover the Top 100 Safest U.S. Banks.
Perhaps the single greatest reason for the unbridled expansion of credit over the past 50 years is the existence of the Federal Deposit Insurance Corporation, another government-sponsored enterprise created by Congress. The coming rush of bank failures is an outcome made inevitable the very day that Congress created the FDIC. The reason is that the creation of the FDIC allowed savers to believe that their deposits at banks are "insured" against loss.

But the FDIC is not really an insurance company. No enterprise, absent fraud, could possibly insure all the banking deposits in a nation. Nor does the FDIC do so, despite its claims. The FDIC is like AIG, the company that sold too many credit-default swaps. It contracted for more insurance than it could pay upon. Because depositors believe the sticker on the door of the bank, they have abdicated their responsibility to make sure that their banks' officers handle their deposits prudently. This abdication allowed banks to lend with impunity for decades until they became saturated with unpayable debts.

Today, most banks are insolvent, and the FDIC is broke. This condition is deflationary for three reasons: (1) Banks are coming to realize that the FDIC cannot bail them out in a systemic crisis, so they have become highly conservative in their lending policies, as described above. (2) The main way that the FDIC gets its money is to dun marginally healthy banks for more "premiums" (meaning transfer payments) to bail out their disastrously run competitors. The more money the FDIC sucks out of marginally healthy banks, the less money those banks have on hand to lend, which is deflationary. (3) The banks that have to cough up all this money will become more impoverished at the margin, so banks that otherwise might have survived a credit crunch will be thrown even closer to the brink of failure. This is another deflationary risk.

A friend of mine whose family owns a bank told me that the FDIC recently raised its 6-month assessment from $17,000 to $600,000. In the FDIC's latest announcement, it is considering requiring banks to pre-pay three years' worth of "premiums," i.e. triple the normal annual fee in a single year. It will be a miracle if the money lasts through 2010. When these funds are gone, the FDIC will have two more options: to issue its own bonds and pressure banks to buy them; and to tap its "credit line" of up to half a trillion dollars with the U.S. Treasury. It's the same old solution: take on more new debt to back up failing old debt. More debt will not cure the debt crisis.

Meanwhile, the FDIC is contributing to the deflationary trend. It has "tightened rules on required capital levels," which forces banks' loan ratios to fall; and it has "extended its extra monitoring of new banks from the first three years of operation to seven years" (AJC, 11/19), meaning that banks will now have to wait four additional years before they can go crazy with loans.

For more information from Robert Prechter on bank safety, download his free report, Discover the Top 100 Safest U.S. Banks. You'll learn how to find a safe bank, the critical difference between lending and banking, tips on international banking, and more.

http://www.safehaven.com/article-15081.htm

 

[Show-me]

I think I will take advantage of this little Dubi thing. Charts look horrible, but the 20sma and the 50sma will give some support. Monday is the last day of the month and I have not used any IFT yet. I can get some today and if it drops again on Monday I will buy some more, 50/50 type move.

I hope you all had a great T-day, I ate way to much, twice.

 

[Show-me]

IFT 50/25/25 g/c/s

 

[Show-me]

http://www.youtube.com/watch?v=LAR2QFqDfnA&feature=sub

 

[Show-me]

http://www.youtube.com/watch?v=XFzqPE5TzzI&feature=sub

 

[Show-me]

Triple top.

http://stockcharts.com/h-sc/ui?s=$TRAN&p=D&yr=0&mn=6&dy=0&id=p40484060161

Double top, flat top, support at 20 and 50 dma.

http://stockcharts.com/h-sc/ui?s=$SPX&p=D&yr=0&mn=6&dy=0&id=p33338809913

Double top, broke trend, and lower peak. The 50 dma is turning down as is the trend.

http://stockcharts.com/h-sc/ui?s=$EMW&p=D&yr=0&mn=6&dy=0&id=p20471443524

Triple top with a hint of head a shoulder and 20 dma crossed under 50 dma.

http://stockcharts.com/h-sc/ui?s=EFA&p=D&yr=0&mn=6&dy=0&id=p51972347693

Dollar trending down and no relief in sight.

http://stockcharts.com/h-sc/ui?s=$USD&p=D&yr=0&mn=6&dy=0&id=p51972347693

 

[Bullitt]

Some bearish thoughts there from a guy who went 50% into equities with Friday's plunge.

 

[Show-me]

I did it because the market trend is to come out with some sensational news to push the market one way or the other only to reverse that a day or a few days later.

 

[Show-me]

Not a long term position.

 

[Show-me]

I am recognizing the connection of the dollar to the US market and the dollar is going down so even thou I hate being in, I may keep some "in" to take advantage of the declining dollar.