just in in-tray
From: H
Sent: Tue, December 7, 2010 3:22:26 AM
Subject: Re: A tough year for stocks...Bear Market That Wasn’t
actually. measured in real money (i.e. gold), the S&P 500'ds rebound has topped in August of 2009, and the bear market has resumed since then. this is a sign that the nominal advance the stock market has managed since August 2009 is a result of monetary inflation. Money TMS in the US has now grown by nearly 30% since mid 2008 (monthly annualized rate of growth as of October: 14.1%) - just to put things in perspective.
On Mon, Dec 6, 2010 at 5:02 AM, B wrote:
Bear Market That Wasn’t Gores Pessimists as S&P 500 Rebounds 20%
2010-12-06 00:09:12.271 GMT
By Whitney Kisling
Dec. 6 (Bloomberg) -- Investors who heeded warnings about
falling home sales, record European budget deficits and the
debasement of the U.S. dollar can nurse regrets after the 2010
bear market didn’t happen.
The Standard & Poor’s 500 Index has gained 9.8 percent this
year and 20 percent since hitting its 2010 low on July 2,
defying pessimists from Robert Prechter to Albert Edwards and
Nouriel Roubini, who expected an economic slowdown that hurt
equities. Bulls, who looked like losers when the benchmark gauge
for U.S. stocks fell 16 percent between April and July, were
vindicated by the rebound that added $2.6 trillion in value.
Expanding factory production, retail sales and earnings
that topped forecasts as well as the Federal Reserve’s
pledge to buy $600 billion of Treasuries spurred the advance as
the economy continued to recover from the worst financial crisis
since the Great Depression. U.S. equity mutual funds with at
least $1 billion in assets returned a median 7.7 percent in the
past five months, according to data compiled by Bloomberg.
“You still have an investment culture that’s still too
heavily steeped in the most recent experience rather than
rationally basing it on the evidence of the day,” said James
Paulsen, chief investment strategist at Minneapolis-based Wells
Capital Management Inc., which manages $342 billion. “We had
such a terrible crisis of ‘08,’’ he said. ‘‘It’s not surprising
to me that the first slowdown of the recovery brought back
deflation-depression mentalities with vengeance.’’
Economic Disappointments
Pessimists gained evidence for their concern midyear. The
Citigroup Economic Surprise Index for the U.S. tumbled to minus
64.3 in August from positive 43.4 in April as Europe’s debt
crisis prompted speculation growth would slow. Negative readings
mean economic reports are missing forecasts.
A. Gary Shilling, who predicted the housing market
collapse, said in August that the economy ‘‘doesn’t have much
gas anymore” and may enter a second recession. While the
increase in gross domestic product slowed to a 1.7 percent rate
in the second quarter, it accelerated to 2.5 percent in the
third quarter, according to Commerce Department data.
The economy should be expanding 5 percent given the depth
of the recession, and investors should avoid equities until
corporate revenue growth accelerates, Shilling said last week.
“We’re in a period of slow growth, probably deflation, and
enough troubles elsewhere like Europe that the dollar and
Treasuries are going to be the safe havens,” said Shilling,
president of the investment research firm A. Gary Shilling & Co.
in Springfield, New Jersey. “The equity markets have been
anticipating a lot faster growth ahead than we’re likely to get,
and there could be some disappointment.”
Expanding Economy
The U.S. will grow 2.7 percent in 2010, 2.5 percent in 2011
and 3 percent in 2012, according to the median of 63 GDP
estimates in a Bloomberg News survey. The National Bureau of
Economic Research said Sept. 20 that the longest contraction
since the 1930s ended in June 2009.
The S&P 500 has gained 8 percent since Prechter in
September recommended holding money in cash because pessimism
would drive investors away from stocks. Technical analysis, or
the process of using price charts to make investment forecasts,
shows the S&P 500 will fall, he said last week. Investors should
wait six years before buying stocks, he said.
“Bottoms are usually sharp, whereas tops often take time
to play out,” Prechter, the chief executive officer of Elliot
Wave International in Gainsville, Georgia, wrote in a Dec. 3 e-
mail to Bloomberg News. “It is perfectly natural for GDP to
rise after the stock market rises. You can’t use GDP to make
buying and selling decisions in the stock market.”
Falling to 450
Edwards, the London-based global strategist for Societe
Generale who warned this year that the world was entering
another recession and that deflation was a possibility, said in
August that the S&P 500 would plunge to about 450. It’s risen 17
percent to 1,224.71 since then.
“The structural bear market has not reached the end,”
Edwards wrote in an Aug. 26 note, a day before Fed Chairman Ben
S. Bernanke signaled he’d buy more bonds. “The equity market
has shrugged off much of the weaker data that abounds, and has
not joined the bond market in a perceptive move. The equity
market will though crumble like the house of cards it is.”
Edwards didn’t respond to an e-mailed request for comment
last week.
Manufacturing Report
An Institute for Supply Management report showed last week
that U.S. manufacturing expanded for a 16th month in November.
Pending sales of U.S. existing houses unexpectedly jumped by a
record 10 percent in October, the National Association of
Realtors said Dec. 2. While the Labor Department said on Dec. 3
that American non-farm payrolls expanded 74 percent less than
the median economist estimate, the S&P 500 rose 0.3 percent.
Roubini, the co-founder of Roubini Global Economics LLC who
recommended selling stocks before the S&P 500 slid as much as 57
percent from its record in October 2007, said in July that the
market will fall and has held to his bearish outlook on the
global economy throughout 2010. The economy will suffer as
Americans cut debt, spend less and save more, implying an
“anemic” recovery, he said last month.
“Roubini Global Economics does not call the markets, but
comments about fundamental direction,” according to a Dec. 3
statement from the New York-based company.
The S&P 500 climbed 3 percent between Nov. 26 and Dec. 3,
the biggest weekly advance in a month.
“A lot of the bears I think were overly obsessed with the
secular challenges facing the economy and ignoring the cyclical
improvement,” said Alan Gayle, senior investment strategist at
RidgeWorth Capital Management in Richmond, Virginia, which
oversees $63 billion. “At the end of the day, should you be
involved with stocks or not? The answer is, ‘Yes, you should.’” |
