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-- Posted Friday, 8 January 2010 | Digg This Article | | Source: GoldSeek.com
Rick’s Picks Friday, January 8, 2009 “Phenomenally accurate forecasts” Here’s a ray of friggin’ sunshine that came a-waltzing into the Rick’s Picks chat room yesterday: “Good afternoon, gentlemen. Everybody loaded up with E-Mini S&P contracts for tomorrow’s POSITIVE jobs report? More good economic news today, retail sales up much better than expected for December. E-Mini probably up 15-20 points tomorrow. Yee- haw!” What makes this comment particularly interesting is that the subscriber who made it lives in Michigan, the very heart of the nation’s Rust Belt. Were we perhaps being churlish to point out that the “much better” retails sales were actually only modestly better than the dismal numbers that had been expected? We did, but Mr. Sunshine was undeterred. “Come on, Rick, he responded. “Things aren’t that bad out there. Businesses around here are actually doing quite well.” Where is “around here,” we wanted to know? And which businesses? “Basically, all businesses,’ he replied. “A guy I went to school with who runs a real estate company said business was up substantially from last year. Our local paper mill is running three shifts steady.” If the supposed global recovery’s credibility hangs on the fact that one Upper Michigan paper mill seems to be humming, and that one Realtor in the same neighborhood has an upbeat anecdote to tell, we’re just not buying it -- especially with no corroborating evidence whatsoever in our own town -- Boulder, Colorado. One might think that because Boulder turns up on virtually everybody’s Top Ten Places to Live list, that the local economy would be relatively resistant to the Great Recession. In fact, business-tax revenues have fallen so steeply that the town has had to make unprecedented cutbacks in services. Moreover, few expect things to improve in 2010, and even deeper cuts are being anticipated for next year. As for the local housing market, although prices have not collapsed as they have in such places as Florida, Arizona and California, the real estate business is on life support. We know about a dozen local Realtors personally, and all of them say this is the worst business environment they have ever seen. One of them who made a lucrative living working the low end -- hard-to-qualify buyers -- has traded down to the point where he lives so to speak, in a shed and now drives a subcompact instead of a Hummer. Another friend, an erstwhile very successful commercial broker, has moved into health insurance. And so on, and so forth. If Things Are So Bad… “If things are so bad,” Mr. Sunshine persisted, “and PEs are supposedly too high, then why is the market continuing higher? If things were as bad as you guys say, the markets should be cratering. I'm not saying its all good, but the economy seems to be improving.” There are of course many reasons why the stock market is moving higher – but none, we would argue, that are tied to the condition of the economy or to prospects for the future. The U.S. stock market and other around the world have benefited from a huge excess of financial liquidity, and that is all there is to it. The final word on this went to a chat-room denizen who was probably less bearish than most of us: “Markets peak during the good news. This one has already priced in recovery. I doubt we head straight down, but with PE's set to be sky-high, even with decent profits, there has to be a lot more downside than upside.” *** Information and commentary contained herein comes from sources believed to be reliable, but this cannot be guaranteed. Past performance should not be construed as an indicator of future results, so let the buyer beware. There is a substantial risk of loss in futures and option trading, and even experts can, and sometimes do, lose their proverbial shirts. Rick's Picks does not provide investment advice to individuals, nor act as an investment advisor, nor individually advocate the purchase or sale of any security or investment. From time to time, its editor may hold positions in issues referred to in this service, and he may alter or augment them at any time. Investments recommended herein should be made only after consulting with your investment advisor, and only after reviewing the prospectus or financial statements of the company. Rick's Picks reserves the right to use e-mail endorsements and/or profit claims from its subscribers for marketing purposes. All names will be kept anonymous and only subscribers’ initials will be used unless express written permission has been granted to the contrary. All Contents © 2010, Rick Ackerman. All Rights Reserved. www.rickackerman.com
-- Posted Friday, 8 January 2010 | Digg This Article | Source: GoldSeek.com
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