Hints from the top, clues from the bottom

jsl

After months of media spin on jobless recovery, the fed started to pave the way to tighten its monetary policy by sending out hints for the public to be prepared. This Fed is very particular in listening what the market wants with a strong tendency to avoid disturbance. Allowing the dollar to be weak was, in no doubt, part of the strategy to release some domestic pressure abroad and was part of no-choice. Now with gold standing above $1000 an ounce and SPX above 1000, it is time to play the game the other way around.

Given personal consumption accounts for 70% GDP,  the Fed has to make sure that the falling sales number doesn't get any worse. Neither inflation nor deflation will help consumer spending, stability will. Unlike Corp Americas that can buy assets to hedge inflation, consumers are mostly thinking of purchasing gold in stead of real spending during recession with high unemployment rate. It is a balancing game hard to play as consumers seldom listen to what the Fed says.

olderfrog

government is giving consumer money to spend.  cash for clunker, first time home buyer credit, energy saving tax rebate. 　But damn it.  I am not qualifying for any of those.  They should give tax rebate to second time home buyer

oldfox

jsl

Clearly, the Fed believes that the bottom of the recession has been reached, however, no one is sure about how the recovery process will be carried out, what are the chances of a relapse. As the focus shifts from the green shoots to the new normal, I felt like we were talking about growing winter wheat. The Fed had been somewhat optimistic earlier this year anticipating 4+% GDP growth next year. Now it seems a little bit less likely with consumer holding their wallets tight. On banks balance sheets, numbers are still pretty ugly, meaning no liquidity insight.

jsl

For those have been tracking financial news closely, you must have noticed the picking up M&A activity. When the slogan of "Cash is king" turned into "Cash is trash", acquiring asset other than real estate is not a bad idea, especially with discounted price tags. Fortunately and unfortunately, M&A activity usually marks the tops and the bottoms of a market. Given SPX 400 points above the bottom and 500 points below the previous high, what do you think?

jsl

If the third quarter earnings are good, aka beating wall street analyst expectations, it means nothing more than aggressive cost controls which contributes to economic contraction rather than expansion. Such an environment is very unfriendly to growth companies, and terrible for negative cash flow companies. For the survivors, however, inventory restocking will come sooner or later. That will be recharge time no one want to miss.

JL01

Hello, JSL 老股民.

jsl

I am not hugely worried about 10% unemployment rate. But it is about as much as I can stand as an investor. In the past several years, jobs such as building homes, selling homes, making loans, selling loans served us little more than wealth redistribution. However, over spending as the consequence of asset appreciation left us with this detrimental crisis. It is a debt crisis that no incentives can cure, as people say, "You never spend out of debt".

AGA7d

The high unemployment is here to stay, 9.8% - 17.5% or 25% depending on how you count. Contrary to the 'biz has cut headcount to the bone', companies still have not fully loaded their workers.

Another thing is - where will the new jobs come from? Health and edu? Sorry, those are consumption not production - unless they can attract lots of foreigners.

开小差

thx,ding

rosyrosy

Lionking

Thanks. JSL always got many good points.

soulvirus

good

For those have been tracking financial news closely, you must have noticed the picking up M&A activity. When the slogan of "Cash is king" turned into "Cash is trash", acquiring asset other than real e ...
jsl 发表于 2009-10-11 01:14

soulvirus

偶认为真正的复苏可以通过下列手段：

1。大力推广绿色能源， 所有学校， 政府全部安装太阳能， 不管代价， 先上规模， 让生产成本下来先。同时大力推广hybrid车， 加大tax reduction。让车厂不要死，顶过3－5年。

2。大力pump股票市场， 加大那些接近trial phase III 的药物的吹捧。 只要严格把好审批，不乱放药进入市场， 那些审批前的超作随便乱搞一气， 所有垃圾上100块再说。 估计可以让市场疯狂一年以上。至于会不会以后像IT一样破灭， 那不重要。 手里股票赚钱， 能刺激傻瓜增加消费。 这才是真正的目的。有钱了以后， 房子问题是个屁问题。 那些有毒资产， 会变香馍馍哈。

3。继续压低美元， 让商品平稳上扬。

偶的目的就是让股市疯狂起来。 偶哈哈哈哈

acura

2# olderfrog


Support time rebate for all time home buyers but it will not happen.

acura

6# jsl


totaly agree