Not a Bear market Rally, but a Bubble.

Watching this market rally in the face of an awful underlying economy. With buyers ignoring very bad financial news or accepting candy coated interpretations of events. (case in point, without the government hiring over 60,000 census takers last month's job loses would have been over 600,000 again.)
It may not just be typical Bear Market Rally. It seems to have run a little long for that. Neither does it seem a rally that can be supported by the reality of the economy. A PE of 15 is silly in this environment.
What I suspect we are now seeing is another bubble, propped up by the Fed and cheer led by the business press. And like most bubbles it will last longer and crash harder than most anticipate.

can you???

Can you build a nation selling 'financial instruments' and borrowing?

Is a credit line a GNP??



All the bailout/stimulus dough should have been put into jobs - infrastructure, manufacturing for the rebuilding of the infrastructure......health care retooling.....

Working people pay taxes. Working people use loads of credit.

This slide will NOT turn around anytime soon.....

which makes this current rally, which seems predicated on the idea that the worst is over, that much more resemble a bubble.

Mine is going into insured CDs until this economy bottoms out completely, but others are buying stocks, also a good idea if the stocks produce income.

However, you're right, this really is a sucker rally. Nothing has been done to fix the systemic problems in the economy that produced the crash and more businesses are finding out that Federal dollars won't substitute for paying customers for long.

Loopholes need to be sewn shut, the offshore conduits nailed shut, banks re regulated, Glass Steagall reaffirmed, the SEC cleaned out of toadies, and the hemorrhage of jobs offshore stanched before this economy will start any sort of recovery.

Until this is done, any rally is a sucker rally.

Of course, if the federal government and the Federal Reserve borrow and/or print up several trillion dollars and pour it into the economy ... well, it has to go somewhere.

And that, in my opinion, explains the stock market 'rally'. What is a bit surprising is that the markets haven't gone up even more considering the amount of money generated by government -- it may show just how much toxic corporate debt is out there sucking up the cash.

I suspect that this bubble will inflate for a while longer as stimulus money is spent and the mega-banks finagle more 'capital' out of the Fed or FDIC, and while the government bails out the auto industry to one degree or another.

But ultimately in the end, the government debt bubble will pop just like the mortgage debt bubble burst. When that happens there will not be a "last resort" to turn to to 'bail' us out. The worst is yet to come, probably within the next two or three years -- then 'Katie bar the door' -- we will probably get our massive social upheaval and chaos.

It's important to make this distinction from a typical "sucker's rally."

Some of the up side, of course, was from annual IRA contributions in April. Most self-employed or self-contributors to retirement accounts that are invested in stocks make a large (sometime the whole year's) contribution in April for the previous tax year. So there's always a spike in share purchases every April.

But beyond that, the gains in the market haven't been broad enough for a typical bear-market sucker's rally. In this case, the gains have centered on the financial sector with some coming from other bailout recipients. So, you're right. This is a "stock bubble." Any money being made is largely limited to pit traders and others with inside information because, as you point out, there is nothing to warrant the increase. In other words, only a "sucker" would jump into this market.

It's a horrible shame that Obama has decided to take this route -- more smoke and mirrors to prolong our potemkin economy. In my opinion, this is what will be seen as the demise of his presidency.

The tech bubble bursting combined with 9/11 threatened to cause a pretty severe recession. So the Fed slashed interest rates and tinkered with the rules to allow credit to flow more easily - sound familiar? This credit flowed into the real estate market because it was the most profitable at the time, causing rampant price inflation, otherwise known as a bubble.

Today's bubble will be much shorter-lived. But it's absolutely the same exact thing happening all over again in a desperate attempt to avoid the economic unwind that has become too powerful to stop.

we haven't seen the bottom yet.

bit too. I asked him what was driving this "recovery" and he didn't know. :silly:

I can't put my finger on it--but something is just not right.

Edhopper, you are probably correct, this is another manufactured bubble.

Two things that really bother me and put my bullshit meter on full tilt:
1.) We've got historically high numbers of people receiving unemployment, and the economy is still bleeding jobs. We're not
creating jobs and jobs are still being outsourced. We're in the throes of a bad recession--but the market is soaring???
2.) The media is shamelessly creating a bubble of it's own--one in which we all live in happy-silver-lining-rainbow land. The
media takes every bit of good news and makes the leap that the worst is over and soon we'll be back to normal. It's like they're
reading from a playbook. If there is bad news or a bad statistic---we're told that "this was expected so it means nothing" or
"these statistics are based on the past and we're moving forward" or "it's bad but not as bad as many thought". Bad news is not
allowed to have any meaning. It is rationalized and converted into non news or good news.

I feel that something is really off. Really wrong. It's my intuition, combined with my understanding of basic economics.

I wonder also--what is going on and how long can this bubble last? How long can the truth be hidden inside a bubble?

And who is orchestrating this nonsense?

I wouldn't have believed it myself.

But that was BEFORE the last 9 years of having our noses rubbed in who really runs things

Sideways to down?




http://www.hussmanfunds.com/wmc/wmc090511.htm


Here's the situation. A variety of investors provided capital to financial companies, with which they made irresponsible loans and took excessive risks. These activities resulted in real losses, which have largely wiped out the shareholder equity of the companies. But behind that shareholder equity is bondholder money, and so much of it that neither depositors of the institution nor the public ever need to take a penny of losses. Citigroup, for example, has $2 trillion in assets, but also has $600 billion owed to its own bondholders. From an ethical perspective, the lenders who took the risk to finance the activities of these companies are the ones that should directly bear the cost of the losses.

...

The bailout is not something “neutral” that cancels itself out, but instead amounts to a transfer of trillions of dollars of purchasing power directly and indirectly from those who didn't finance reckless mortgage loans to those who did. Farewell to the projects, innovation, research, investment, and growth that might have been financed by the savings and retained earnings of good stewards of capital. Those funds are being diverted to the careless stewards who now stand to be made whole.

In short, these bailouts are emphatically not neutral to society as a whole, because they damage incentives and divert productive resources into hands that have proven themselves to be reckless and incapable. To believe that the bailouts are just money we owe to ourselves is to overlook serious ethical implications, as well as distributional and incentive effects.

...............................................................................................

Looking at the last 100 days or so...you see that the US is OWNED by the military/defense sector...the wall street/finance sector...and soon we will see....the big pharma/health care sector.

It will be interesting to see IF there is even any attempt at serious voting reform...so that we are representing by people who DON'T ride around in limos. I'd bet...NOT.

Assignment: find and name a sector or area of the US economy that isn't being "regulated" by the same people being "regulated" Revolving door syndrome.


Please....do not feel exploited...it is all just your imagination. Your programming WILL resume. Just relax...all will be well. We need just a teeny bit more nectar.

I am not even sure why I watch this stuff.

If there was ever a sign of a bubble, that would be it.

So many people lost so much money last fall because they listened to the talking heads. Like I said, I have to wonder why I even watch these money programs. My instinct tells me to wait until unemployment goes below 6.2. We are too young to keep our money in cash.

1) Never ever listen to anything on CNBC or anything like it

2) see rule number 1

by technical definition, this is nothing but a bear rally until the S & P CLOSES above the 200 month moving avg, about 1000

2003-2007 proved it

I'm just saying it's not a typical bear market rally.

Rent-a-centers and speculative coffee bean companies and third tier tech stocks have been climbing 30% a day in some cases while blue chips with high dividends languished.