ECRI are trenders not macro economic.They look at at set of indicators(at variance with the LEI) and they can't back test too far because they haven't been at it that long(they have a couple good calls and one i know to have been wrong,that i know of).
Many,even bears,can see a short phase recovery because of the pressure to increase very low inventories but for ECRI this translates into THE Recovery and on the first up blip on GDP the bulls will go into a wacko frenzy.
I,myself,feel the market will probably have one more looney land run up at that point as the average investors will be primed and pumped and propagandized sufficiently by the Fed/the MutualFunds and the Big Brokerages to be led to the slaughter-house by an economic system that feeds off of the crowd and gives NOT a damn if the crowd goes under as long as when it is all over they("the big boys") have many many billions safe and sound in their secure coffers.
To save my time:) i post a post a made following Barron's last Roundtable discussion to highlight Marc Faber's view <<<< Fallope wrote<<These are truly unique times. And this kind of stock appreciation
cannot go on forever. But I wouldn't be so foolish as to think I could
call a top on it or an end to it. Since EVERYONE from the media to the
financial institutions to the government to the vulture capitalists to
the small fry investors has a vested interest in keeping it going as
long as possible, for all I know it's going to keep going for another
3-5 years.>>i respond it will be volatility,a swing traders paradise--no way,imo, there will be a steady bull-ride ahead.Play the wildness,but never believe in it.(at times the rallies will seem like the return to a 3-5 year bull,but i simply can't see that,as i feel the sell-offs will be equally dramatic,in a wild bull/bear tug of war,where top and bottom calls will be commonplace)
I am a fierce Bear in the LONG term view,but during sell-offs i will only be playing that trend and on up reversals i will be playing that trend--just as coldly objective as i can be ----but eventually,at some point in time this view of Dr.Marc Faber,expressed in this week's Barron's Roundtable will come to pass.(And it by coincidence matches my view,i was not aware of Faber until quite recently)--here is excerpt from Barron's Roundtable <<<<Cohen: The rate of productivity growth in this country has doubled since 1990-'91. And it is not because workers have become more efficient. It is because we have peeled off jobs that can be done more efficiently elsewhere. We have created more value-added jobs in the U.S. It is a painful process, but with an economy that provides capital and training and education, labor productivity grows over time.
Q: Marc, you must have something to say about this.
MacAllaster: You might even know something about it.
Biggs: I think Abby is right. America is perfect. The trouble is that the stock market is priced for perfection, too.
Faber: I am not sure the American economy is perfect, and I certainly disagree that the consumer is in great shape. The economy and the financial markets have performed dreadfully considering that you've had 11 interest rate cuts in the past 12 months. If you are optimistic and expect 3%-5% real growth toward the end of 2002, then you must also accept the investment implications in terms of commodity prices and interest rates. Conversely, if you're looking for only a mild recovery, then maybe you ought to be in bonds and not equities.
Q: Well, what are you looking for?
Faber: The American economy is a disaster waiting to happen. Greenspan's interest-rate cuts have supported consumption artificially and borrowed from the future. The so-called booms in car sales and housing will come to a very bitter end. Greenspan basically moved the bubble from Nasdaq into other sectors of the economy, and these bubbles also will burst. Whether they burst right away or in 2004 is immaterial.( that's my point also,when is immaterial really,the fact is,it is inevitabe--but in the mean time play the swings,and i suspect they shall be quite dramatic until this game of manipulation finally collapses,imo.-itsallover)
Now, consider the huge money flows from foreign countries into the U.S. If this money hadn't come in, how much lower would the stock and bond markets be? I think the American consumer is brain-damaged. He should be pulling back and increasing his savings rate dramatically. But, no. He's pushed by CNBC and the authorities who always talk nicely about the future into consuming more.
Samberg: You would have said the same thing four years ago.
Faber: Four years ago I was very negative about the Asian economies because at that time they depended heavily on foreign capital. And courtesy of Mr. Greenspan and the U.S. Treasury, which had bailed out Mexico in 1994, we prolonged the Asian bubble. Had Mexico not been bailed out, we would have had less or no capital flowing into the emerging markets post-'94. We would have had a recession in Asia sometime in 1995-96. All I'm suggesting is that monetary policy can have a very negative impact in the long run, but cushion the financial markets or an asset class in the short run. I think the years 2001 to 2003 will go into financial history as the awakening of academics to the fact that you cannot solve every problem with monetary measures. Thereafter whole economic policies will be very different than they were between 1945 and 2000.
Cohen: I'm puzzled by a few of Marc's conclusions. I hear that poor U.S. policy has been responsible for a great deal of damage.( gees that's surprising,Abby puzzled by such views:)-itsallover)----end segment clipped from this weeks Barron's interactive.wsj.com |
