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View Full Version : Economic recovery or will the bubble burst next year?


Mark Heide
12-14-2003, 05:09 AM
I have not seen Wall Street so bullish since the last time the bubble burst. The employment picture is still dismal. We are still losing more jobs than the economy is creating. The federal government is spending money as if it was growing on trees on programs that don't produce much benefit (we can talk about that stuff on other topics forum). What scares me is the dollar continuing to lose value while we are still importing more than exporting. Anyone have any insights.

Good Luck

Mark

adios
12-14-2003, 08:23 AM
"I have not seen Wall Street so bullish since the last time the bubble burst."

I tend to agree but before I'd act on my perception of market sentiment I'd want to look at quantitative measures of market sentiment since they're more or less objective. Are there any quantitative measures that are leading you to this conclusion?

"The federal government is spending money as if it was growing on trees on programs that don't produce much benefit (we can talk about that stuff on other topics forum)."

Perhaps we should.

"What scares me is the dollar continuing to lose value while we are still importing more than exporting. Anyone have any insights."

Low short term interest rates and the budget deficit's contribution to the current accounts deficit IMO are hurting the US $ the most. As stated previously I'm no expert on currencies though. In the minutes from the Fed's latest FOMC meeting they stated they didn't see a big pick up in employment in 2004 more or less. So yes there are economic risks out there as always.

scalf
12-14-2003, 10:56 AM
/images/graemlins/smile.gifhey mark,

happy holidays; gr8 to have mark working ; will be in tunica early jan...would like to buy you dinner...

happy holidays..

rmbs..

gl /images/graemlins/smirk.gif /images/graemlins/diamond.gif

Wildbill
12-14-2003, 10:28 PM
I don't think your jobs assessment is true anymore, many experts and economists are starting to question the labor numbers anyways. The unemployment rate went down despite this sense that more people are back looking than before, a sign that the payrolls surveys may indeed be undercounting. A lot of research was done for the last recession and it indicated that the payroll survey vastly undercounted the jobs because it didn't capture a lot of self-employed and very small business hiring, things that tend to grow fastest at this very juncture. A lot of economists were thinking 150k jobs added and either still a 6.0 rate or even a bump up as a lot of discouraged are presumably looking again. Instead it came in at 53k and yet the rate went down slightly, definitely a sign that the research may be correct.

I do think it is getting a bit bullish out there, but that is the nature of the market. When it is clear improved news is coming the market always bids it up early. I don't think they have gone too far in a macro sense if you leave out the speculative tech stuff, I still don't understand the exuberance there, but in terms of a situation where you get companies growing profits at about 10% without hardly any revenue gains, now you get a chance to boost revenue gains in with likely continued productivity (maybe at a slower rate). I think earnings could easily grow 20-25% annual pace in the next 6-9 months, there really isn't anything to slow down the economy until then. I think that kind of growth and the resurgence of the market will also put a floor under the currency moves, that while they will continue to drift down, the undeniable strength of the US market will prevent it from becoming a rout.

I do agree the market has come a long way and might be due for a breather, but I don't see much chance of a significant correction barring a very unforseen event. And also don't forget as much as everyone is talking exuberance, the market would have to be ahead of what it was at the height of the bubble to once again be a similar bubble to before. Despite all the doom and gloom and all that has happened since early 2000, the economy has grown by about 8% since then so by proxy the valuation of the market as a whole would have to be approximately 8% more than it was at it's peak.

Mark Heide
12-15-2003, 03:05 AM
Wildbill,

I don't like the way that they measure unemployment for a few reasons. One is I believe self employed workers have never been counted. I think part of the reason is due to self-employed workers have periods of no work for a few weeks and then lots of work. This is just the nature of the situation. I do think that the unemployment figures and the Conference board Help Wanted Index are outdated. First the major portion of the unemployment figures depends on persons filing claims. Well, if you are in the high tech sector like myself or my acquintances you will not be counted when your unemployment runs out. Furthermore, we know from surveys that finding a new job after getting being let go during the past few years has extended beyond the traditional measurements (don't ask me to quote but I remember a report of one company that does employment surveys). As far as I'm concerned I think a more precise method could be calculated, by comparing how many jobs are lost and how many new ones are created. To even make this more accurate, I would even categorize this figures by including firing and hiring salaries to look at the economic worth of both groups of workers that have been let go and hired.

Anyway, here's a bullish report from the Conference Board:

http://www.conference-board.org/economics/press.cfm?press_ID=2284

Good Luck

Mark

Mark Heide
12-15-2003, 03:14 AM
scalf,

Have a good holiday season. I will not be going to Tunica this year. /images/graemlins/mad.gif This is due to my new employment, plus they changed my work week from 4 days to 5. /images/graemlins/mad.gif Since, I've only been working since July, I will not be elegable for vacation time until the end of January. /images/graemlins/mad.gif

Furthermore, since I am a new employee, I will probably not get to go to Vegas for the WSOP next year in April. /images/graemlins/mad.gif

But the good new is my trial runs on my craps system is showing a profit. I've been testing it after work, since there is a casino a 25 minute drive from where I work. /images/graemlins/smile.gif

Good Luck

Mark