The Arena is quiet now. The upward momentum is a fond memory of the Red Clan and the downward spiral a fresh nightmare of the Green Tribe.
According to the latest Barron’s, a news weekly I used to read in a state of excitement from cover to cover and word for word, the stock indices that mattered to the world have averaged only modest gains since the middle of 1998.
interactive.wsj.com
<<The Dow, which closed Friday at 10,539, rose an average of 7% a year in the three years that ended in June. The S&P 500, now 1215, fared worse, climbing almost 4% per year, and the Nasdaq, which finished the week at 2084, advanced by less than 5% annually, trailing supposedly boring bonds. Measured by the Lehman Brothers Aggregate Bond index, bonds were up an average of 6.25% in each of the past three years.>>
The case for stocks now appear clearly defined but as yet not settled.
The bull case, hitched to a battle cry of “we have bottomed” says (a) Fed is ready to ease, (b) interest rate is low, (c) taxes are reduced, (d) consumer are still buying, (e) investors seem optimistic, (f) money market funds are flush, and (g) real estate markets remain firm.
The hope is that, since we are at the bottom, then better get ready to go up.
The bear case, garnished with inflation spice, deflation sauce, and explosive credit-blowup pepper, says (a) profit estimates falling, (b) dollar strong, (c) employment weakening, (d) economy slowing, (e) capex spending weak, (f) slowing overseas economies and markets, and (g) balance sheets are weak.
The outlook is simple and straightforward: regardless of inflation or deflation, the recession is on, now, and matters can deteriorate fast because (a) future profits can disappear altogether, (b) past profits will be restated down, (c) dollar weakening will cause different and no less critical problems, (d) the economy is piling on more debt without equity backing, (e) further weakening corporate and private balance sheets, (f) credit market, minus equity backing, will seize up, (g) capex, less debt backing, has neither the motivation nor the power to recover anytime soon, (h) overseas economies and financial markets are on the verge of domino-chained and un-choreographed implosion, (i) US tax cuts will do nothing as it simply reduces government surplus which isn’t there in any case, and most importantly (j) there is no political leadership in sight anywhere, and finally, (k) Pezz’s cheap oil will obviously not saved this day.
The world hangs at the edge of the precipice, holding on to the US consumer’s weakening hands. The brave J6P consumer is being pulled to the edge of the precipice, and, at the very edge, when he sees clearly the depth of the abyss, thinks about the number of years or months or weeks he has left to remain productively employed voluntarily or otherwise, when he reflects on his emptying wealth nest and look in the faces of his family, will panic and will let go of those hands, even if he has to cut off his own arms to do it.
Panic always comes at the end, wildly, and with full conviction.
There are several species of animals in the Arena: (a) the bulls hanging on at the edge, (b) J6P being hung on to at the edge, (c) the bears nudging J6P every-now-and-then with a helping hand, (d) the intended survivors either running away or already positioned to watching the drama through scopes attached to rifles, and (e) the governmental, financial and media cheerleaders urging the J6P to not run away or, better still, to transform themselves into willing or unwilling bulls.
The choice is ours to make, explanation to others is not needed, and consequence is ours to bear, alone with our families. No blames, no tears, and no leaving the game where we did not make the rules and no longer understand the logic.
Considerations such as heroism, macho-ness, nobility, humanity, nationality, ethnicity, creed, and religion are meant for other decisions. The game theory of risk vs. reward is our guide, financial survival followed by prosperity is our objective, and fun is the goal.
Now I sit myself down to do this …
planetunreal.com
… and I feel better already, with the game map setup downloading, soon to be equipped with rockets, shielded in armor, and bathed in blood of another. Oops, no, no, get out of the way Maurice! … stop the machines, stop the machines!
planetunreal.com
… oh, oh, I hope you got out of killing range in time …
planetunreal.com
Um, now, I wonder who that nameless soul used to be …
planetunreal.com
Chugs, Jay |
