Market
 

Well, hope everyone enjoyed that little stock market rally.

CSCO gave atrocious guidance for Jan qtr. Oct retailer reports look to be very bad tommorrow. From 3Q (Sep) reports and data, already knew we were in worst consumer downturn since 1974. But already things are looking worse.

Economy slowed fast in 3Q (Sep) and slowed even more dramatically in Oct. Unless economy quickly rebounds in Nov/Dec - which hardly seems likely - 4Q (Dec) will be ugly. May be headed into worst consumer downturn since WW2, corporate spending is rolling over hard, exports will/are as well.

Europe is speeding downhill. China is rolling over and data suggests a hard landing.

No major govt action on econ stimulus, credit market repair, mortgage refinancing or anything else likely for next 3 months. Current Administration is a total lame duck - the President has effectively left the building.

Quick SPX pop couldn't break through 1,000, hard to call the wiggles but don't see a good reason why don't retest the 10/10 lows - and having a hard time making a good case why shouldn't break them.

Yeah, it is getting much worse out there now. Despite being in cash, I've pretty much tuned out the market and economy. I'm working longer hours and will take a needed vacation this winter.

Cratering stock prices and declining housing values is taking a huge toll on the American psyche. We aren't getting any relief in housing for at least a few more years. Hopefully the stock market will bottom and begin a slow climb. It's amazing the market is sitting at levels from the late 90s.

Personally, if SPX breaks 800, I will start to pour in dollars.

My wife is a strategic planner for an S&P 100 company. She said that the bad news that ratered the stock market in October is nothing compared to the recession that is coming. She says they are seeing NO orders coming in. No one is buying - commercial or consumer. If you didn't buy in at 8700 when Wayne did, don't worry, you'll get your chance again soon enough.

Thanks for the insightful post -- I always appreciate hearing from the Pelicans who are financially connected.

On the other hand, while I know you're probably right, I really wish you could be wrong. This is going to be an ugly Christmas for retailers all around. I know that in my extended family, we've all agreed to basically spend little or nothing on presents. Not that we were ever big spenders, but we never really came out and said, "$5 limit, everyone!"

Good luck to all,

Dan

Bah! I'm refusing to participate!

Actually, worried here too....equities portion of our portfolio not doing specifically good.

What we had in October will be nothing when compared against the collapse of the dollar that is coming. (What the government has done in October is bringing on the dollar's collapse even faster.)

When the government cannot sell anymore of our debt to foreigners (which is what will happen when the dollar collapses), they will have no choice but to "print" money to cover the deficit.

The inflation will be horrendous when this happens.

Large sections of our "middle class" will be wiped out during the coming currency collapse.

Got gold?

Other scenario is having other currencies inflate, as well. The rate cuts in Europe are a step in that direction.

I say cut the crap and drop fed funds target rate to MINUS 4.0%. Anyone who does not buy commodities and housing will be forever priced out of the market. Renters will live in tent cities and Honda's while the Average Joe, with no hard assets, is forced to dumpster dive for food and steal gasoline.

John, you are in the biz...what do you think about the recent talk of the Government taking over all 401K's, returning their funding to August levels, then guaranteeing an annual 3%?

Seems to me this would remove a bundle from what was once a free market...

Have not heard of that, and no conceivable way it could happen. Someone with a tinfoil hat came up with it.

No tinfoil hat...check testimony before a congressional committee...this info gleaned from Bob Brinker's "money talk"...IMO no tinfoil hat in his wardrobe.

"The uncontested absurdities of today are the accepted slogans of tomorrow."

Has never been more true. Things which were inconceivable not very long ago are well accepted today. For tomorrow, I don't think anything is inconceivable.

A reluctant +1.

Desperate people will agree to participate in their own demise with gusto.

Lots of proposals get "testified" before congressional committees, or even mentioned by individual congressmen, and 99% of them are vapor.

Do the numbers on this idea. Total 401K plan assets in the US were appx $4.5TR (as of 2007), before reportedly losing about $1TR this year.

Is the govt going to simply "give" those Americans with 401K plans a cool $1 trillion, and then commit to giving them another $140 billion each year (that's 3% of $4.5TR)? If the stock market declines further, does the govt fork over another $1 trillion? Aside from where the money comes from, what might those Americans without 401K plans think about this? Do the IRA holders start queueing up next (that's another $4.7TR that has lost another $1TR reportedly)? Where do the homeowners queue up for their $5.0TR or so?

The idea is a total non-starter. The govt is not this stupid, they won't touch this idea w/ a 10 foot pole.

http://www.anbid.com.br/documentos_download/Fundos/Apresentações/ICI50/Reflections_US_Retirement_Market.pdf

http://www.pionline.com/apps/pbcs.dll/article?AID=/20081027/PRINTSUB/310279971/1005

When an all leftie legislature writes the bill, and a lefty Prez signs it? Don't say I didn't warn ya...

I will be happy to bet you some real dollars that this does not happen.

We will have to figure out how to define the bet so that the result is unambiguous.

From jyl The govt is not this stupid, they won't touch this idea w/ a 10 foot pole.

Unfortunately, the govt is Nancy Pelosi and Harry Reid. I hope you're right, but it wouldn't surprise me. With the value of 401(k)s and IRAs in the toilet, it's the perfect time, and they'd have monies available to advance Obama's promises of tax breaks for all but those who pay taxes. I don't have info available, but I'll just bet that those with IRAs are in the top 1/2 of wage earners who actually pay taxes.

What monies would they then have available? I don't understand that comment.

I do definitely think inflation is coming and the intereste rates are going to explode in the next 1-3 years... We are printing money like mad right now to "pay for" the war in Iraq. Every reason to believe we're printing more to cover the $700B bailout and although nobody talks about it openly, I wouldn't doubt for one second that we're printing to deliberately inflate the currency in order to "stop" the slide of housing prices (hey, if a house $400k five years ago is only worth $200k today we'll just print twice as much money so it's worth $400k again, right?) Yes, I really do think it works this way and yes I do think it'll eventually come back and bite us on the arse. Perhaps sooner than people think.

Gold? Bah. Worthless metal unless you're a dentist. Better - I've got ammo. Lots of it.

"Smart Money" article here:

http://www.smartmoney.com/Personal-Finance/Retirement/Bear-Market-Puts-401k-Under-Microscope/?afl=myyahoo

"Bear Market Puts 401(k) Under Microscope
This year's market downturn has put 401(k)s under the microscope, prompting proposals to alter or even eliminate the company-sponsored retirement plans.

With stocks falling, Americans fretting over their dwindling savings and Democrats winning Washington, criticism of the current 401(k) system is sure to get more airtime in the coming months. House leaders have already started holding hearings, and Rep. George Miller (D., Calif.), chairman of the Education and Labor Committee, which oversees retirement issues, has called 401(k)s "a big failure in terms of providing an adequate retirement for middle class Americans."



John, I wouldn't want to take your "real money"...

Jeff? FWIW, local talk host talked to a gun shop owner here...a pallet of .223 the shop owner got in was sold out in one day...

John,

You seem to be the money guy, not me. But if the government has $10 Trillion in debt and they seized my IRA and wrote me a 3%/year IOU wouldn't that give them some $4.5 Trillion that they can't get their hands on right now? They could do this in lieu of printing more money and pushing inflation.