A new Bull ? re: Hoey's, hooey...
...watching CNBC this a.m. & Dick Hoey of Dreyfus is the guest co-host. Hoey's a good guy,a good guest; less of a cheerleading pom-pom waver than most, but I simply can not believe the reasons that Hoey & most of the pundits from Wall St. are using to sell "The New Bull." (or more acurrately "New Bull IV" if one is keeping score over the last year (vbg).
IBM is a CFO's dream for making the numbers. There is no massive job creation, cap ex, or consumer spending reflected in their earnings release today. IBM isn't going to drive the economy.
Intel cutting cap ex - plants shutting down all thru the semi channel however is... unfortunately, in the other direction.
This Rally is about Institutional rebalancing from Bonds to Equities with YOUR/OPM money ! These Money Managers are always going to have 97%ish of YOUR/OPM money "in" Bonds, or Equities. There is no massive inflow of foreign, or even "new" domestic cash pouring into the US Equity market... quite the contrary.
Bonds yields reached historic highs - yields historic lows; a no-brainer profit taking rotation out of bonds; doesn't mean that stocks are cheap... just less expensive (in their mind) than bonds.
Dick Hoey(to his defense) like virtually everyone else; is using the talking points of - "only 3 times in history", or "anytime the S&P is cut in half" etc... but, the one factor that they are missing is simply that if you start at an unprecedented speculative "TOP"; when you reach that only 3, or 4 times in market history magic 50% retracement - that doesn't create value, or a bargain make.
Using that logic; Amazon was the buy of a lifetime at $100, WCOM at $30... ?
C'Mon !?!?
Capitol One, Sears, Circuit city showing the reality of Main St USA... a consumer crushed by debt, unable to keep his payments up, let alone extend his spending that has only been kept alive by the unprecedented historic length of the Mortgage Refinance Boom.
People want to point to Housing, Record starts etc.
My response is simple; we have most definitely seen a nesting response to the collapse in equities. People in still strong financial positions are certainly going to take advantage of what literally is a once in a lifetime oppportunity to finance the single largest financial transaction of a lifetime... at record low cost levels.
Just like "0%" financing in the Auto arena turned slumping sales with normal financing into record setting sales with "0%"... this too shall pass.
Neither the Auto Sector, nor the Housing Sector are going to propel this economy. There is not going to be any significant job growth, or cap ex spending from either...I don't think Ford, or GM are going to be building any new Auto Plants where those laid off from the Airlines, or Motorola, or Lucent are going to go to work... neither is the Homebuilding Sector going to create 400,000 new drywall, or carpentry jobs.
These are simply blow off tops in the making, due to historically low costs for the 2 largest financial transactions people make that are being artifically extended by the unprecedented rate cut environment we've just exited.
Those that still can; are taking advantage of historically low rates... those that can't (and that's the problem) aren't and "0%" Mortgage Rates don't matter if you've already "been there & done that" tapping out all your equity in the initial round of the Refi Booms, or if you are one of the still 400,000+ unemployment claim stats.
Then the pundits are pointing toward the financials; saying in a true "new" Bull market - they must lead.
Does it look like Citi, Merrill, or JPM are leading us out ?
We've seen the debt collapse hemmoraging our largest banks, the Derivatives Bubble looms ahead... In consumer finance; consumer credit problems & over-aggressive lending practices are haunting Capitol One, Household and even retailers like Sears - which is "part-bank".
And as far as the Financials having to lead market's into new Bulls ? A Couple of major German Banks are basically insolvent, will have to merge, or be bailed out... Germany's economy is hemmoraging and the DAX is up 25% in 6 days !?!?!?! ... now the CNBC pundits are pointing to the DAX... as a sign of the NEW BULL ~
This DAX [see chart & tell me this reflects A NEW BULL (lol !)?
finance.yahoo.com^GDAXI&d=c&k=c1&a=v&p=m50,m200,s&t=6m&l=on&z=m&q=l
From 5,000 to 2400 in 6 mos and and a PROP JOB move to 3,000 into the face of a Banking Crisis and we should look to the DAX as proof that the World is entering a "New Bull" !?!?!?!
Puuuuuuuuuhhhhhh-LLLLllllllllleeeeeeeeeeeeze ~
A Global Prop-Job by any other name is just that... A Global Prop-Job - period.
Germany was at the edge of the abyss... hello Teutonic-Plunge Protection Team.
...nothing more, nothing less.
Led the Bond Money throw it's weight around the Equity Market here...grab a smoke, pull up a chair, have a whiskey and this too shall pass ~
The BEAR is alive and well.
And using Hoey-esque logic...anyime we get the best of the best unhedged Gold Stocks reach levels near their late July HUI 95ish low levels... buy 'em.
The Bond market re-balancing is giving us a golden opporunity here... recognize it for not just what it is, but also for what it is not...ie: a "New" Bull.
GOLD... we're just getting started.
Watch unemployment, Industrial Production and Cap Ex spending...no sign of a recovery...and we've still got one helluva Debt-Orgy hangover to work out and we aren't even close to bottom's up vs. top down true value levels imho...and then there's that Terrorism/War thing...
A "NEW" Bull ?
I don't think so. |
