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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: ild who wrote (66180)	7/15/2006 7:43:10 PM
From: J_Locke	Respond to of 110194

The housing bubble has been the fountainhead of excess liquidity in the global financial system. It's over now. Even if housing prices go sideways for 15 years instead of experiencing a sharp downdraft, housing will no longer be creating excess liquidity. Why, therefore, shouldn't we expect equity prices, which have been a beneficiary of that liquidity, to regress to fair value, which, on a price to peak earnings or Tobin's Q basis would mean 800 to 900 on the S&P? The current equity selloff is a function of waning global liquidity. Also note that the major equity rallies of the past few years have been accompanied by an orgy of Fed Coupon Passes. With oil at $78/brl and gold at $650/oz, the fed is in no position to engage in significant monetezation.

To: ild who wrote (66180)	7/16/2006 12:04:30 AM
From: CalculatedRisk	Respond to of 110194

YoY Retail Employment: Danielle DiMartino: Retailers' actions point to recession dallasnews.com I added this chart ... Excerpts: ... we already know, from last week's labor report, that retailers were compelled to cut payrolls for a third consecutive month in June. "More strikingly," Goldman Sachs chief economist Jan Hatzius wrote, "the year-on-year growth rate has plummeted from 1.3 percent in 2005 to -0.2 percent as of June 2006. Year-on-year declines in retail employment are unprecedented outside of recessions." ... During the housing boom, home-equity withdrawals were a big contributor to consumers' ability to spend. But in the first half of 2006, nearly 90 percent of refinancings were cash-outs, up from 20 percent in 2003. In other words, it used to be that people refinanced their homes to lower their payments. Today almost all go through the exercise just to unlock cash. ... It stands to reason that retailers would be the first to detect the diminution of this source of disposable income, which is at least partially to blame for the 86,000 jobs the sector has shed in the last three months. "Retailers may have decided that the recent weakness in personal consumption will persist," Mr. Hatzius added. Of course, the spin doctors are sure to dismiss the negative growth in retail employment. Sure, every time it's happened since 1945 it's presaged a recession. But it's bound to be different this time. Of course. MY COMMENT: this indicator might have changed because the internet is changing the retail model. It might REALLY be different this time!