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Strategies & Market Trends : Mish's Global Economic Trend Analysis -- Ignore unavailable to you. Want to Upgrade?

To: SouthFloridaGuy who wrote (90412)	11/18/2008 11:33:23 AM
From: gregor_us	4 Recommendations Read Replies (2) \| Respond to of 116555

Here are my start dates for various bear markets/tops/recessions. 1. Early Q3 2005, Homebuilder equities start a bear market, and the first-in bubble cities like San Diego peak. Thus, the US housing market has been in a bear market for at least 2.5 years, as even the last cities to fall like SF had peaked by Q2 2006. 2. Truck sales and auto sales by US manufacturers peak later in 2005, even as Japanese auto maker sales continue to do well, in the US. This is a direct result of the homebuilding peak. 3. Mortgage lenders peak and go into their own recession by Q3 2006, with early failures coming fast into Q4 2006. 4. In February 2007, the Financial Sector equities start their bear market. Despite the mistaken analysis that holds that commodities were the preferred investor sector this decade, or that commodities were a bubble, it was in fact the Financial sector that held this decade as the top sector in the SPX, and was the most favored sector by the street, and average investors. I date the current bear market to February 2007, even though the SPX did not top until later in October. This dating is similar to the COMP peak in Q1 2000, but with the SPX peaking later. Thus, the bear market in Financials started 21 months ago. 5. US employment in the private sector peaks in the Summer of 2007, as the mix of private-public hiring tilts hard-away from the private sector. The first ugly jobs reports start just after Labor Day 2007, reporting on Summer. 6. The SPX peaks in October 2007. Most other stock market indexes around the world do the same. 7. The US economy is probably in recession by late in Q4 2007, and certainly by Q1 2008. Now, here is what is really interesting.... Most economists, investors, traders, and journalists think the recession and bear market began.....6 weeks ago. They all think the recession JUST began, and that the stock market is "forecasting" a recession "about to unfold" and that the stock market is going to "follow the recession down into next year." And the reason is emotion. The violent action in October through now is the easiest way for people to make contact with economic distress. They ignored a depression in housing bubble markets, and terrible US auto and truck sales numbers for years. And they ignored a bear market in financials that started 21 months ago, and a peak in US private sector employment last year. What we can conclude is that average people, and especially economists who should know better are all overwhelmed emotionally by stock market action. Not economic data, not stories in the newspaper. And virtually none of them thinks that either the market or the economy could recover any time before 2010, or even 2011 because "this all just started last month." Now, I grant that a person aware of all the above could come to a dark outlook--but, for different reasons. And that's fine and I might even be inclined to agree. Roubini's fame is a tell. And in similar fashion, it "seems" like he has been famous all along. But actually he stormed the stage only just this Summer. gregor.us Thoughts? G